Even after oil prices surged last week following a surprise OPEC production cut, oil traders don’t seem convinced that prices will continue to rise. In fact, oil futures seem to expect prices to pull back after the near-term price shock.
While shorter-term Brent crude futures, the international benchmark, were up 6.6% at $85.05 a barrel in the week to Thursday, futures expiring in December 2023 were up a 4.6%, at $81.50. The fact that December futures are trading at lower levels than current prices seems bearish: why buy oil stocks if oil prices will fall by the end of the year? But the current trading pattern, known as the lagging, has actually been a bullish sign in the past and may point to further gains for oil and stock prices. On Monday, the
SPDR Power Selection Sector
the exchange-traded fund rose 3.9%.