- Boom: 2003-08; oil less than $10/barrel in 1999, to $150 in mid-2008.
- Super Cycle: main drivers of upward trend in commodities remain in place: pent-up demand in emerging markets and supply constraints caused by a lack of investment over the past 20 years, including a rise in resource nationalism
- September: traders speculated on winter demand, but storage grew stronger due to a weak economy. Spot price ended up being significantly lower than 1-mo futures.
Nomenclature
- contango: price of a commodity where future price is higher than the spot price, or a far future price higher than a nearer future price. Represents the price of storage
- Standard in equity markets. Normal for non-perishable commodity which has a cost of carry (example: interest paid on a margin account). Perishable commodities are not in contango, since eggs delivered today are not the same eggs in 6 months
- contango: surplus; backwardation: shortage
- Oil storage trade: buy at spot, sell future, store oil for delivery, pocket the difference
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