Light Crude Futures Contracts...Anyone an expert?

[Chilli]

I've currently long on a Feb contract, which expires on Monday. I was about to roll it over to the Mar contract but noticed the price difference is about $7 (Feb $38 - Mar $45). Is this normal to have such a difference, and would this suggest that the Feb price will rise towards the March level nearer expiry, or would you expect the $7 to stay roughly the same? I noticed that the Brent futures are about $1 apart.

Many thanks.

[bluevelvet]

Hardly an expert, (trade a lot rolls though) but looks like usual contango on commodity futures, oil inventories have been higher last few weeks as global demand stalls, oil producers likely to reduce output to tweak price higher in next few months, this will not effect the feb contract, but will be priced into future months ....look at expiration date, as in a few days to go and compare option open interest on puts/calls between the 2 months, should help to formulate a view. personally I think you left it a bit late to roll, then that would have taken a view (easy to say now), Feb is basically done.

[MitchT]

My understanding of rolling-over positions is that they'll close your position on the Feb contract at the final settlement price for Feb and re-open it on the March contract at the first posted price for March. There will probably be a charge of half of the bid/offer spread. Your open P/L won't change to reflect the price difference.

[Chilli]

MitchT said:

My understanding of rolling-over positions is that they'll close your position on the Feb contract at the final settlement price for Feb and re-open it on the March contract at the first posted price for March. There will probably be a charge of half of the bid/offer spread. Your open P/L won't change to reflect the price difference.

That's the thing though....I'm currently long at 38ish, but when it rolls it'll shoot up to 45ish...Just seems a huge difference. Also, not sure they'll roll it. I'll have to close and re-open.

[2something]

Now you know why the big players are chartering oil tankers. Anyone that can take physical delivery and store oil is at a big advantage to those that can't.