At the end of June, the crude curve really got out of hand. WTI futures had returned to backwardation many months before, and then the eurodollar/collateral explosion May 29 sapped some crude strength. Over the following month, curve backwardation would become extreme as the benchmark price seemed ready to skyrocket.

After getting up near $80 a barrel, the price reversed. During the several weeks of weakness, the futures curve remained in steep backwardation – the expectation that the recovery (narrative) would continue whatever any short-term profit-taking.

But as prices did rebound through September, there was already trouble underlying. The curve was changing shape, flattening out even beyond normalizing that pretty ridiculous backwardation spike late June/early July.

WTI would nearly match its earlier high on October 3, by then the curve was already a little threatening becoming unlike its shape from July. Since that day, it’s been a steep incline down in price as the futures curve has shipped back into contango.

It has continued to flatten out at the back and “fish hook” at the front. These are quite concerning signs about perceived future imbalance in the oil markets. Those concerns are not altogether about the oil markets.

Of course, in the booming global economy of the mainstream, this is the product of success; too much success. The US is pumping out a record amount of oil and the rest of the world (OPEC) has started to normalize to $100 oil expectations. It’s another supply glut.

Stop me if you’ve heard this before. It should sound very familiar, too familiar. We need only go back four years for all the same general soundbites: the economy is booming, the energy sector is pumping record amounts, and WTI contango is the least of anyone’s concerns.

Obviously, it didn’t quite turn out that way which raises the interesting question as to whether the same mistakes will be repeated. I’d bet they will, right up until the bitter (cycle) end.