Cash market/structure/roll in oil trading
Hello guys !
Hope you are all doing well. I work in an oil trading company and would like to have your opinion on something. I hear some traders on the desk who say that in a backwardation they better price their physical cargo late in the month rather than early (when buying). Flat price is of course assumed hedged and they buy their cargos on an NOR basis (pricing could also be EFP related, it does not matter). They are exposed of course to the roll but i struggle to grasp why they say that the timing within the month matters. Structure can change positively or negatively regardless of the moment in the month. Do they imply that cash is expected to increase as we creep up to the roll ? (they buy their cargos at a fixed premium so they are of course bullish cash as they get long physical but cash follows its own dynamic in my opinion and can be disconnected to structure). I have the feeling that some of them are mixing up forward price with the expected future spot price which are of course completely different.
Pleased to hear your opinion and happy to discuss further.