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	<title>Comments on: Calling oil wrong</title>
	<link>http://ftalphaville.ft.com/blog/2008/05/09/12892/calling-oil-wrong/</link>
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	<pubDate>Wed, 20 Aug 2008 10:31:27 +0000</pubDate>
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	<item>
		<title>by: Monkey</title>
		<link>http://ftalphaville.ft.com/blog/2008/05/09/12892/calling-oil-wrong/#comment-20298</link>
		<pubDate>Fri, 09 May 2008 16:57:37 +0000</pubDate>
		<guid>http://ftalphaville.ft.com/blog/2008/05/09/12892/calling-oil-wrong/#comment-20298</guid>
					<description><![CDATA[tears for tier1:  I was using that as an example.  When you calculate the forward price you do have to factor storage costs in.  And with equity dividends and bonds IR payments.  But as an example it illustrates why you would not expect the expected future spot to equal the forward.  I am not an expert in oil so I dont know the costs of storage but I think you can pay someone to look after it for you]]></description>
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		<title>by: tears for tier 1</title>
		<link>http://ftalphaville.ft.com/blog/2008/05/09/12892/calling-oil-wrong/#comment-20295</link>
		<pubDate>Fri, 09 May 2008 15:21:10 +0000</pubDate>
		<guid>http://ftalphaville.ft.com/blog/2008/05/09/12892/calling-oil-wrong/#comment-20295</guid>
					<description><![CDATA[Monkey
- all true but I always wonder, in commodities such as oil and softs, how do you physically store the stuff for, say 3 years?
Obviously it works with say copper bar etc but with oil is there any way of storing the stuff in very large physical volumes (outside the US strategic reserves) to allow such risk less timing trades.

I always wonder how the so called speculators who are pushing up the price of oil are actually storing it in large enough volumes to make it worth their while.

Only oil well owners can sell these forward long-term contracts without excessive risk?]]></description>
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		<title>by: Ivory Basement</title>
		<link>http://ftalphaville.ft.com/blog/2008/05/09/12892/calling-oil-wrong/#comment-20280</link>
		<pubDate>Fri, 09 May 2008 13:32:50 +0000</pubDate>
		<guid>http://ftalphaville.ft.com/blog/2008/05/09/12892/calling-oil-wrong/#comment-20280</guid>
					<description><![CDATA[So one shouldn't always by the back of the curve based on fundimentals then.]]></description>
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		<title>by: Monkey</title>
		<link>http://ftalphaville.ft.com/blog/2008/05/09/12892/calling-oil-wrong/#comment-20258</link>
		<pubDate>Fri, 09 May 2008 11:18:51 +0000</pubDate>
		<guid>http://ftalphaville.ft.com/blog/2008/05/09/12892/calling-oil-wrong/#comment-20258</guid>
					<description><![CDATA[This effect is called normal backwardisation.  If you think logically about it it makes sense as the buyer of a forward contract that you receive a premium for taking on the risk.  On the other side imagine that you are the holder of the asset (in this case oil) and you sell forward and the forward equalled the expected future spot rate then you would have a riskless position giving a return above the risk free rate (as you will have used a rate above risk-free to calculate your expected future spot rate) - which is nonsensical.]]></description>
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		<title>by: G Cox</title>
		<link>http://ftalphaville.ft.com/blog/2008/05/09/12892/calling-oil-wrong/#comment-20195</link>
		<pubDate>Fri, 09 May 2008 10:00:57 +0000</pubDate>
		<guid>http://ftalphaville.ft.com/blog/2008/05/09/12892/calling-oil-wrong/#comment-20195</guid>
					<description><![CDATA[The only    forward curve that  normally shows only expectations and does not reflect any other factor is that for   interest rates on government  bills / bonds. 

 (An   expected change in taxation of interest  at some point along the curve might be a distortion).]]></description>
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