It almost is like sitting at a craps table every day and seeing what the dice say. When it comes to C5 diffs, the key of late has to been to get on the coattails of the hot roller and let it rip. And given the open interest on June C5 block futures, how come I have a feeling it is going to be much more random over the coming days and weeks?
Granted, that isn’t to say that economics aren’t driving values here. Well, they are in most locations but reportedly, the arbs/margins are razor thin. However, in some of the markets we follow and broker, we aren’t quite sure there is anything more than short-covering driving the trade. Sure, sure, there are small-ish (what some would call normal) contangos in play even at the differentials being traded on small lots.
Ripsaws in any market are expected given the past couple of months. The only advice I have is that the best cure for high prices are high prices and just as such the best cure for low prices are low prices. That self fulfilling prophetic idea, in a hyperfast world of quantitative traders and algos the same, lead only to the increased volatility across the board. Most of the rules are out the window. So what you can control is how hard and often you push the accelerator pedal. Stay shiny and chrome my friends.