Sinopec Kantons Has Plenty In The Tank

Savvy investors can make good money by anticipating the future. In the case of battle-weary investors in the oil industry, it may pay them to keep a close eye on futures, crude oil futures that is.

If investors spared a moment to divert their stunned gaze away from the gut-wrenching carnage being meted out on the spot oil price and instead refocused their attention on the prices traders are willing to pay for oil in the future, they would understand that better days may be ahead given expectations that oil prices in six months will be higher than they are now. The canny way to profit from futures prices being higher than spot prices – or in ‘contango’ in trader parlance – is to buy oil now, store it, then sell it later at higher prices implied by the futures market, and hopefully make a profit once you subtract your storage costs. Well, that’s the theory.

（online.barrons.com Edited by Topco)