Natural Gas Contango Widens Further

August 13, 2012

The two energy benchmarks see very different moves in their forward curves.

Featured Commodity

NYMEX Henry Hub Natural Gas

Natural Gas

CONTANGO WATCH: The natural gas contango widened notably last week as prices sold off. With only a month of summer remaining and cooler-than-normal temperatures forecast for the next two-week period, it’s likely natural gas will remain in contango, at least in the near term.

However, even at current levels, roll costs in natural gas are fairly negligible for short-term holders. The front-month roll, for example, is close to $0.04/mmbtu—relatively small for one of the most volatile commodities.

ROLL COSTS: It costs investors 16.83 percent annualized to roll front-month natural gas contracts, up from 1.26 percent.

BOTTOM LINE: Contango

Has oil moved into backwardation yet? What does corn’s roll yield look like? How do you know when it’s time to buy—or sell?

Each week, we investigate the futures curves of the U.S.’ most important commodities, helping investors better understand the market and seize buy-and-sell opportunities as soon as they arise. For an easy-to-understand explanation of contango, backwardation and roll yields, please click here to go to our Hard Assets University.

To see current contango curve and front-month roll costs for each of our selected commodities, please select a sector or commodity below (or read the whole report ):

Data as of close on August 10, 2012
Data courtesy IndexUniverse.com

Energy

Agricultural Commodities

Precious Metals

Soft Commodities

Industrial Metals

.

Current Roll Previous Week's Roll Past Year Average Roll Historical 08/10 5YR Annualized Roll
Energy WTI 3.65% 3.35% 0.30% 11.65%
Brent -18.38% -13.68% -0.63% 2.36%
HH Natural Gas 16.83% 1.26% 3.04% 35.94%
Precious Metals Gold 0.74% 0.86% 0.12% 1.10%
Silver 1.22% 0.58% 0.13% 1.51%
Platinum 0.63% 0.60% 0.25% 1.30%
Palladium 1.10% 0.31% 0.25% 1.56%
Industrial Metals Copper 0.28% 0.16% -0.01% -0.60%
Aluminum 8.20% 4.65% 0.57% 6.83%
Zinc 4.02% 2.65% 0.10% 5.11%
Lead 1.44% 3.72% 0.20% 1.41%
Nickel 1.65% 1.47% 0.09% 1.25%
Tin -0.13% 0.67% 0.06% -2.03%
Agricultural Commodities Corn 4.88% -0.25% -1.06% 10.54%
Wheat 7.80% 6.13% 2.68% 17.07%
Soybeans -10.31% -4.14% -0.04% -6.71%
Live Cattle 14.82% 14.83% 0.88% 7.21%
Lean Hogs -15.57% -14.12% 0.49% -13.03%
Soft Commodities Coffee C 7.45% 6.30% 1.00% 7.82%
Cocoa 2.47% 1.52% 0.98% 3.79%
Sugar #11 5.40% 4.76% -1.79% 5.38%
Cotton #2 2.75% 6.97% -0.39% 2.19%

 

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