The tango has long been known as the dance of love. Around the NYMEX trading ring, the ‘tango—the locals' shorthand for contango—has as many lovers as detractors. Contango is the pricing phenomenon characterized by successively higher back-month prices. For example, a $2.98 contango was evident on Friday when October 2010 WTI crude oil finished at $75.17 a barrel, and January 2011 crude settled at $78.15.

After Tuesday's losses in the U.S. crude oil market, bullish sentiment was bolstered by a key industry report about the supply of Texas Tea. Overnight trade in WTI crude was buoyed by the American Petroleum Institute's estimates that indicated crude inventories falling much more than analysts' expectations.

Last week's Desktop piece, "Oil Fundamentals," illustrated the connection between contango in the West Texas Intermediate crude market and U.S. oil inventories. Contango, in case you missed the article, refers to successively higher premia built into the prices of futures reflecting the costs of carrying the commodity until delivery.

Sometimes readers wonder why so much attention is paid to the weekly oil inventory numbers published by the U.S. Energy Department's statistical service. Truth be told, a lot of trader breath is held awaiting each Wednesday morning release by the Energy Information Administration.

If you're a regular reader of Desktop columns, you've no doubt noted the buildup in oil inventories that's been reported recently. Since the top of the year, an additional 30.5 million barrels of crude have piled up domestically, bringing stocks up to nearly 358 million.

No doubt, Friday was a bad day to be an oil bull. Nearby NYMEX crude futures tumbled $2.27 a barrel, or 2.7 percent, cramming a week's worth of losses into a single day. Oil prices have been skidding since April 6, so traders were eager to jump on the selling train when the Goldman Sachs news hit the wires.

The streak is over. After 10 straight weeks of inventory-building, oil supplies fell by 2.2 million barrels, according to this morning's report from the U.S. Energy Department.

Crude oil prices are headed up. But you already knew that, right? In the first quarter of 2010, front-month NYMEX crude prices have risen 5.6 percent. That doesn't sound like a very large gain until you realize that the gain's been accompanied by a 29 percent shrinkage in contango.

• Why contango doesn't matter—but roll does
• What to look for in an ideal commodity index
• Why you don't want to be ‘where the action is’

A record short position has been amassed by commercial accounts in the gasoline market. In sum, a record high 132,416 NYMEX futures and option equivalents are held short by producers, users, merchants and processors.

• Should investors bet on seasonality?
• How contango has eaten into returns
• Why more supply has meant less contango

When the skies cleared on Sunday, many backyard grills in our cabin-fevered neighborhood were fired up for the first time this year. The perfume of sizzling beef and pork that wafted over our street got me thinking about this spring's prospects for meat.

• The risks of a passive approach
• Will we see active commodity ETFs?
• Can contango continue—and does it matter?

• Going long during contango
• The top performers
• Regulatory fire fizzles

• The details on their new index
• The passive vs. active debate
• The case for commodities right now

• Why do returns between ETFs, ETNs and trusts differ?
• Rankings of 12 different commodities
• What a difference contango makes

• How endowments approach gold
• Is gold or GSCI a better diversifier?
• Why contango matters