Oil Prices

[dan_s]

There is a short video at this link that explains why backwardation in the NYMEX crude oil market is actually bullish for prices in the short-term: http://us.rd.yahoo.com/finance/external ... &cm_ite=NA

An oil trader once explained it to me this way. Think of the higher front month contracts as the crest of a wave that keeps moving on to the next month's contract. Oil traders (who cannot take physical oil) close out their positions at a profit and can move the money into a future contract at a lower price, hopefully to ride it up again. This momentum keeps moving the futures contracts higher.