Very interesting where the contango is right now regarding oil contracts:April: 40.08May: 42.04 (+1.96) - UCO/SCO tracks thisJune: 43.34 (+1.30)July 44.51 (+1.17) - DXO/DTO tracks thisAug 45.73 (+1.22)There used to be a $12 gap from the leading contract to the end contract. It has now contracted to $5.65. When the contango gap was approximately $12, the spread looked like this (+5.5, +3.5, +1.75, +1.25). I am still of the opinion that this gap will widen in the coming month here as inventory concerns are replaced with OPEC cuts and tension in the world.
If you believe contango will become more severe, then you definitely don't want to be long any of these oil ETFs that are forced to continually roll their contracts. If you must, then USL is the one to own because it holds futures contracts spread over the next 12 months, thus minimizing costs associated with contango.The time to be long oil is when contango comes out of the market (unless of course you own physical oil with long-dated futures sold against it). The spread does not in any way indicate where oil prices will be tomorrow, in a month, or in 12 months.Also, OPEC cuts have not had any material impact on oil prices for years. OPEC members constantly cheat one another and rarely stick to their quotas. War, on the other hand, is a different story. If Russia's situation continues to deteriorate, look for them to increase tension around the globe, as a means of getting oil prices up, and increasing petrodollar flows into the country.