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Futures Spread Indicates Bullishness for Oil Prices

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Futures spread

Yesterday, US crude oil November 2018 futures closed ~$3.48 above November 2019 futures, and between September 17 and yesterday, US crude oil November futures rose 5%. On September 17, the futures spread was at a premium of $2.41.

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Futures spread and oil prices

The market sentiment toward the oil demand and supply situation is reflected in the futures spread. Usually, oil prices and the futures spread move in the same direction. In the past five trading sessions, the spread has expanded. US crude oil prices have risen five percentage points.

Energy stocks

Between September 17 and yesterday, oil-weighted stocks Oasis Petroleum (OAS), Denbury Resources (DNR), and California Resources (CRC) rose 11.8%, 16.3%, and 26.6%, respectively, outperforming peers.

Forward curve

As of yesterday, US crude oil futures contracts for delivery between November 2018 and October 2019 were priced in descending order. The price pattern is a positive sign for ETFs that follow US crude oil futures, such as the ProShares Ultra Bloomberg Crude Oil ETF (UCO) and the United States 12-Month Oil ETF (USL).

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