Just only a week into the June futures contract, the focus will now start to turn towards the July futures contract instead
With the USO announcing that it will exit current June futures and push its exposure all the way out until June next year, and the biggest commodity index also rolling exposure to July contracts instead, we are pressing the fast forward button in the oil market.
There is still about three weeks of trading before the official rollover to the July futures contract, but it is already the most actively traded one in the market now:
As seen above, open interest in the July contracts for both Brent and WTI are outweighing those in the June contracts already.
The market is very afraid of getting burned twice after what happened with the May contract, where it plunged to settle at -$37, hence the spreading of the risk.
As the focus now slowly turns more and more towards the July contract, it is also going to be more painful for rollover positions. The contango now is over $7 today, with WTI June futures down by nearly 8% to $11.80 while WTI July futures are up 5% to $19.00.
