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68 comments on Peak Oil Contango?

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subtr4ct on March 23, 2006 - 5:33pm Permalink | Subthread | Parent | Comments top
Okay - I think I figured out how to post the chart...

The prices are for NYMEX crude oil futures contracts delivering about 3 years in the future in the early 1990's, as the futures did not trade 5 years out back then.

subtr4ct

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Leanan on March 23, 2006 - 5:42pm Permalink | Subthread | Parent | Comments top
Thanks!  Nice chart.  

If the end is chopped off, here's the link to view it directly:

http://i78.photobucket.com/albums/j100/subtr4ct/oil.jpg

It really spikes up, starting around the beginning of 2005.

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Halfin on March 23, 2006 - 5:44pm Permalink | Subthread | Parent | Comments top
That's a great chart, thanks for posting it. It's amazing how flat it is. One question, are the dates shown as the contract delivery dates, or as the trading dates? So for example the firet one, 11/23/1990, is that the price in 1987 for a contract delivering in 1990? Or is it the price in 1990 for a contract delivering in 1993?

It would be great to compare it to then-current oil prices to see how it compares, but I need to know what the dates mean.

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The Swede on March 23, 2006 - 5:54pm Permalink | Subthread | Parent | Comments top
Halfin, The dates are the time of trading in the future 5 years forward.
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subtr4ct on March 23, 2006 - 5:56pm Permalink | Subthread | Parent | Comments top
Glad you find the chart interesting.  I first made a chart like this in July of last year, and it led me to really put my money where my mouth is.

The first observation is the settlement price on 11/23/1990 of December 1993 futures.  The last point is yesterday's closing price of Dec. 2011 futures.

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DuncanK on March 23, 2006 - 6:18pm Permalink | Subthread | Parent | Comments top
Shit! OK, another coffee-spitting moment!

This graph is one of the most compelling illustration of the "Peak Now" that I have seen this year.

This really helps to debunk the view that the current 'plateau' is just another little hiccup in the march on up to 120Mbd in 2030.

Thanks a lot for posting this graph.  I hope Stuart can add this to his "why we're probably peaking now" page.

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subtr4ct on March 23, 2006 - 6:35pm Permalink | Subthread | Parent | Comments top
Sorry.  Go ahead and swollow your current sip...  Okay, the picture for natural gas is very similar:

Note that I have used a dollars per 100,000 BTU price (not the conventional dollars per 1,000,000 BTU price) to make the two series of comparable magnitude.

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Seadragon on March 23, 2006 - 8:52pm Permalink | Subthread | Parent | Comments top
I don't suppose anyone here thinks the price of oil in 5 years will be anything near $65, which sorta suggests a buying opportunity, or am I reading this wrong?
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stranger on March 24, 2006 - 3:37am Permalink | Subthread | Parent | Comments top
good buy if you have deep enough pockets and youre patient. long term, i wonder what the chances are of NYMEX ceasing to operate or certain classes of traders being restricted. anyone know what might cause either of these things to happen, besides the obvious 'end of the world' stuff?
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unplanner on March 25, 2006 - 4:01am Permalink | Subthread | Parent | Comments top
I have been wondering this too.  If the market was left to its own devices, I think today's prices for crude five years out are a steal.

But governments could intervene and your options may as well be worthless.  But peak oil in combination with inflationary fighting measures could so devastate the economy (via deflation) that oil five years could cost only half as much as it does today.  But one shouldnt rejoice if average income has fallen to one tenth of today's level.

Has anyone else thought about this?  Peak Oil decimating the economy to the point where the price of oil falls simply because of deflationary pressures (think cascading unemployment reducing demand for virtually everything which in turn reducing pressure on scarce resources). Add in potentially restrictive government restrictions like gold confiscation or protectionist terrifs or high interest rates or permitting employers to unilaterally cut salaries).

Or is the inflationary route pretty much guarenteed?

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Stoneleigh on March 25, 2006 - 10:46am Permalink | Subthread | Parent | Comments top
Deflation is my primary concern, as I have attempted to explain here many times over the last several months. I would expect oil prices to fall (for a while) as a result of severe economic contraction, but I agree with you that purchasing power would be falling even more quickly. Oil would nominally be cheaper, but less affordable than it is now. I don't see deflation as being confined to the US, so a similar dynamic could be widespread.
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BabyPeanut on March 26, 2006 - 4:45am Permalink | Subthread | Parent | Comments top
But governments could intervene and your options may as well be worthless.

What government intervention has been or could be used?

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unplanner on March 30, 2006 - 3:04am Permalink | Subthread | Parent | Comments top
I was just imagining ordering the halt in the trading of oil futures.  Hasn't happened, but it doesnt mean it couldnt.
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Biologyfool on March 23, 2006 - 8:15pm Permalink | Subthread | Parent | Comments top
Can you tell me where (link?) you got the historical prices of the futures contract?  Thanks!
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subtr4ct on March 23, 2006 - 9:10pm Permalink | Subthread | Parent | Comments top
All data in both charts that I posted are from Primark-Datastream, a subscription data service.  I expect that it is fairly expensive, but I don't actually know.  Such data are available from numerous services, however.  I don't of any free sources for historical futures data.
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Nate Hagens on March 23, 2006 - 9:51pm Permalink | Subthread | Parent | Comments top
I have the futures data - if you email me I can send it to you
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