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Notes
- 1.
Backwardation refers to a situation in which a commodity's future price for future delivery is below the price for immediate delivery.
- 2.
This section draws on previous work where we compare storage operation in the UK and Germany (Neumann and Zachmann, 2008). The basic idea is that a competitive market such as the UK will use natural gas storage according to the theory of storage.
- 3.
In an application to the UK market Hobæk et al. (2008) find a non-linear effect of storage on the relation of spot and futures prices.
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Neumann, A., Zachmann, G. (2009). Expected Vs. Observed Storage Usage: Limits to Intertemporal Arbitrage. In: Cretì, A. (eds) The Economics of Natural Gas Storage. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-540-79407-3_2
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