In times of cheap oil prices, the forward curve is often in contango.
That means that the price for a prompt delivery is cheaper than a delivery in the future.
So if you go long crude with futures, each month you have to roll your contracts before they expire, and buy a more expensive one. So you end up paying a premium.
Kinda like if you want to store oil to speculate, you have to pay for storage.
You might as well buy a basket of oil majors stocks, which are a pure play on oil prices
Agreed, which is why I do not want futures contracts, or any options with a set time horizon. I consider the current price to be a fluke, I am willing to make a significant bet that the prices will recover, but I do not know whether it will take 3 months or 5 years; I am willing to wait it out.
I understand that this will effectively mean paying a "storage premium", but I am looking to minimize such costs by pooling money with a large fund that does this for a living and has tools and agreements that I do not have.
On a basket of oil majors as a proxy: sorry, this sounds suspicious. I think there are a lot of factors beyond oil prices in play which should make those pretty well decorrelated from short term oil price movements. Is this really true? Honest question.
That means that the price for a prompt delivery is cheaper than a delivery in the future. So if you go long crude with futures, each month you have to roll your contracts before they expire, and buy a more expensive one. So you end up paying a premium.
Kinda like if you want to store oil to speculate, you have to pay for storage.
You might as well buy a basket of oil majors stocks, which are a pure play on oil prices