Crude spreads and the supercontango - is it just inventory?

That's a solid take on supercontango. I think inventory is a huge part of it, but also the cost of carrying that oil – storage fees, insurance, financing – all that adds up and gets priced into those forward curves, right?

That's a solid point. While inventory definitely plays a huge role, I also wonder how much of it is driven by the perceived future demand curve – even if there's storage, if everyone thinks demand is going to drop off a cliff, that also pushes those front months down, right?

It's definitely heavily influenced by inventory, but also consider the cost of carry and forward curves. Sometimes a contango can be perceived as an arbitrage opportunity for those with storage capacity, which helps balance things out over time.

That's a solid point, and inventory certainly plays a huge role. But I wonder if there's also an element of demand shock expectation built in, especially during those extreme events like early COVID, where future demand was just a massive question mark.