Last month, a spill in the Keystone Pipeline leaked around 210,000 gallons of oil on South Dakota land, shutting down the 2,600 mile-pipeline down for about two weeks. In that time, about 590,000 barrels per day were not making it to oil refineries along the Texas gulf coast.
Matt Smith, director of commodity research at ClipperData, says the impact of the pipeline’s shutdown can be understood through the concept of “backwardation,” in which the price of a commodity’s futures trades below the current price.
What you’ll hear in this segment:
-How the recent dips in oil supply has affected current and future crude oil prices
-How long the trend of lower future prices for crude oil is expected to last
-How the current effects of backwardation compare to previous backwardation trends
Written by Rachel Zein.