Friday, December 17, 2010

Sell December 2011 U.S. Oil Futures JPMorgan (NYSE:JPM) Advises

JPMorgan (NYSE:JPM) recommends that investors should buy up Brent contracts and sell their West Texas Intermediate crude for December 2011, citing the expanding discount of New York futures to the London benchmark.

On Wednesday the disparity between West Texas to Brent grew to just over $4.00.

JPMorgan said, “Strong demand generates high margins, which in return leads to a ramp-up of refinery capacity. The stronger the increase in margins, the more likely it is that refiners will respond by a combined overkill. We think that is happening now.”

Brent contracts have outpaced New York contracts at an 18 percent growth rate to an 11 percent rate in 2010.

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