This is one of the weirdest things I’ve ever seen in energy data. I just checked the NYMEX oil prices web page, and what do I see but steadily rising prices from July 2008 ($128.98) all the way to December 2016 ($138.38) for the most recent settlement prices. (The NYMEX contracts listed on that page are monthly through the end of 2013, and then include just June and December for 2014 through 2016.)

Why is it weird, at least in my experience? Two reasons:

First, that $138.38 is the highest price I remember seeing on the NYMEX.

Second, the monotonically non-decreasing nature of the contract values–they rise in every new contract except for one pair (December 2009/January 2010), where they’re the same–is something I’m sure I’ve never seen before.

In fact, the general phenomenon of futures contracts being priced higher the further you go into the future (”contango”, in market speak) is an issue of some debate when you’re talking about oil. See Has Peak Oil–As a Meme–”Tipped”? (Out of Futures Backwardation and into Contango) for a good explanation of why this is thought to be at most a fleeting situation. The short version: The incentive to hold on to a commodity and sell it later at the higher price will always pull the futures contracts into “backwardation” (prices decline as you go further into the future). [insert Back to the Future joke here]

What to make of this?

I can’t stress this enough: Do not, do not, DO! NOT! consider the NYMEX numbers to be some definitive, oracular statement on Where Oil Is Going. Those prices are the collective judgment of many people with vastly different energy market knowledge, futures trading experience, and agendas, even beyond the desire to make money. As I so often point out, in one form or another, what do you think the NYMEX contract for this month “predicted” in the dim and distant past of, say, 2005? Do you think it was even close to the current $129/barrel price? Hint: Oil settled on May 20, 2005 at $46.80. My hunch is that the oil prices on that page will ultimately prove to be conspicuously low for a good portion of those contracts.

The Lasting Contango in NYMEX likely won’t be. Lasting, that is, at least not for much longer. I wouldn’t be surprised to see it disappear in a matter of days, if not hours.

While we’re on the topic, let me take a half step in the general direction of Blatant Speculation and ask: What would it tell us if the contango in the oil futures market persisted? Would it mean that perhaps we’ve had a real, honest-to-Pete paradigm shift right before our eyes, a rewriting of the rules? Could it mean that the endless blog postings and articles and books about peak oil have finally filtered into the caffeine addled minds of traders and they’ve concluded that not only is peak oil real and imminent, but that even if oil companies wanted to withhold oil from the market now to sell in the future, they can’t do so with a large enough volume to rebalance current and future prices and pull the market toward backwardation? (Again, see the article linked above for the trader techie details.)

I won’t pretend that I have any answers to those questions, nor am I willing to make a blatant guess as to whether the current state of contango is anything more than just a short-lived quirk. But you can bet your Internet connection that I’ll be checking the NYMEX numbers a lot more closely than normal for the next few days.