"While taking a relative position with oil as one of the components, how much would the contango/backwardation in oil affect the relative position, on a say, six month to one year horizon - or put another way, is it risky to take a relative position with oil, because of these factors?

"Thanking you in advance"

Eoin Treacy's view Thank you for this question which others may also find of interest. When considering a pairs trade using futures, one will always have to take roll and interest rate costs into account. A backwardation for either of the constituents should help potential profitability on a long position because of the positive roll yield.