Dave Marino, http://oilblog.platts.com

The Basis for Long Dated Oil Futures Prices

The forward price of oil is not a prediction of where spot prices will be in five years, but the current price for oil to be delivered five years from now. Current prices are higher because tight supply/demand fundamentals for crude have placed a premium on prompt oil over oil for deferred delivery. Many factors set the price for long-dated oil -- expected production costs, economic growth predictions and interest rates, among others.