Calendar Spreads in Energy
Spread structure, roll cost, and inventory; trading and hedging with calendar spreads
Calendar Spreads in Energy
Executive Summary
Oil prices exhibit seasonal patterns that repeat from year to year, driven by demand and supply cycles that are largely predictable. Winter heating (November–March) and summer driving (May–September) create recurring effects. The main tool to profit from them is the calendar spread: simultaneous long and short positions in the same crude (or product) at different expirations. This module covers seasonal demand patterns and forward curves, calendar spread mechanics, strategy design (buy winter/sell spring, buy summer/sell fall), multi-leg spreads, and risk management. For practitioners and consultants, it supports position and programme design and trading decisions.
Learning Objectives
By the end of this module you will be able to understand seasonal demand patterns in oil markets and their impact on forward curves, design calendar spread strategies (buy nearby, sell deferred) to profit from predictable patterns, analyse roll yields and storage carries in calendar spreads, evaluate seasonal trading opportunities by region and product, and model multi-leg spread trades and optimise for risk-adjusted returns.