Thanks Templeton, what I am thinking of doing now is to long WTI alone. I believe the spread will be narrowed - with BC coming down and WTI going up or BC going up and WTI closing the gap by going up faster.
I'm would want to understand the rollover behavior before I jump in.
If you like the spread; trade the spread not just one side
You have a good idea; there may be a profit if the spread goes back to "normal". Margins on spreads are much reduced; so your ROI can be worthwhile on a smaller move and the intraday fluctuations need not whip you out of a "correct" position. However, if I read you correctly; you are thinking about taking only one side of the spread. That can be dangerous. You can be correct that the spread will shrink but when we have CL moving $6 in a day on black swan events; that change in the spread can be insignificant.
Watching the spread can give you insight into the market. CL is a storable item. There is a carrying cost (storage, insurance and interest cost). Right now the CLJ is almost $4 over CLH while CLM is only $1 over CLK. What I hear the market saying is that we do not want more oil right now. Please keep it in a ship somewhere and deliver it later. The market is paying abnormally more than the carrying cost. My guess is that when we get past this rash of extraordinary events; the CL will fall quickly. I would not want to be holding a long position ; waiting for the spread to narrow. But if you hold both sides of the spread your account volatility will likely be less.
If you have the patience to field a newbie question -- I was just wondering who are the big traders of BRN and why? Hedgers who can't get enough volume in CL or who are hedging particular exposure in Brent, big speculators who want more oil exposure, arbitrageurs, mostly Europeans, or other? And what is volume or general market size of BRN compared to CL? And why is CL more predominant than BRN (or is that just my limited exposure)?