Rollover & basis
What is super-contango and how does it allow large commercial entities to lease physical oil tankers for guaranteed profit?
By Easy Money Scanner · Educational reference · Not investment advice
The short answer
Super-contango is an extreme forward price premium over the near/front-month price that can make a 'cash-and-carry' trade economic: buying prompt barrels, paying to store them, and locking in a higher deferred-delivery price via a short futures position.
How it works
This dynamic was highlighted in April 2020, when it was the expiring NYMEX May WTI futures contract itself that traded and settled negative (-$37.63/barrel) on April 20, 2020, not the broader physical spot market — the move was driven by a shortage of available Cushing storage and an inability of long futures holders to exit positions before physical delivery obligations hit. Firms with access to storage capacity could, in principle, benefit from the resulting contango between that distressed near-month price and higher-priced deferred contracts, but this was not a riskless or guaranteed profit: it required actually securing scarce, costly physical storage and tanker capacity.
An example
Firms with available storage capacity leased tankers and tank farm space to exploit 2020 contango after the May WTI contract settled at -$37.63/barrel.
Risk & limitations
This was a futures-price event, not a simple spot-price collapse; physical storage capacity, leasing costs, and logistics constraints limit the strategy's scale, and it is not a risk-free or guaranteed-profit arbitrage.
Examples are hypothetical, not trade recommendations. US contract and regulatory references do not automatically apply in Canada. Rules, margin requirements and broker policies can change; confirm them with the relevant authority and your broker.