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OIL: Crude Backwardation Continues to Soften Amid Surplus Risks

OIL
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Crude curve backwardation continues to soften this week as futures have fallen to technical support levels amid potential Ukraine peace talks and signs of softening Israel/Hamas tensions. 

  • Prompt WTI and Brent crude time spreads have fallen to the lowest since mid November amid a potential supply surplus this year despite recent supply disruption due to sanctions.
  • OPEC this week kept its global oil demand growth forecast for 2025 unchanged at 1.45mb/d while the EIA STEO increased its expectations of excess supply in 2025 and 2026. IEA today however sees the surplus narrowing after a modest increased in global oil demand growth to 1.1mb/d.
  • President Trump’s pledge to increase production and current OPEC+ plans to raise output from April could add to oversupply this year.
  • The longer dated Jun25-Dec25 spread are also softening back to levels seen in early January after the spike higher to a peak on Jan. 15 amid concern for the impact on supplies from US sanctions on Russian and Iran. Brent has fallen from a peak of $3.74/bbl to $2.26/bbl but remains above levels below $1.5/bbl seen in Q4 2024.
    • Brent APR 25 down 1.1% at 74.38$/bbl
    • WTI MAR 25 down 1.2% at 70.52$/bbl
    • Brent APR 25-MAY 25 down 0.03$/bbl at 0.28$/bbl
    • Brent JUN 25-DEC 25 down 0.16$/bbl at 2.25$/bbl
    • WTI MAR 25-APR 25 down 0.07$/bbl at 0.06$/bbl
    • WTI JUN 25-DEC 25 down 0.13$/bbl at 2.28$/bbl

 

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Crude curve backwardation continues to soften this week as futures have fallen to technical support levels amid potential Ukraine peace talks and signs of softening Israel/Hamas tensions. 

  • Prompt WTI and Brent crude time spreads have fallen to the lowest since mid November amid a potential supply surplus this year despite recent supply disruption due to sanctions.
  • OPEC this week kept its global oil demand growth forecast for 2025 unchanged at 1.45mb/d while the EIA STEO increased its expectations of excess supply in 2025 and 2026. IEA today however sees the surplus narrowing after a modest increased in global oil demand growth to 1.1mb/d.
  • President Trump’s pledge to increase production and current OPEC+ plans to raise output from April could add to oversupply this year.
  • The longer dated Jun25-Dec25 spread are also softening back to levels seen in early January after the spike higher to a peak on Jan. 15 amid concern for the impact on supplies from US sanctions on Russian and Iran. Brent has fallen from a peak of $3.74/bbl to $2.26/bbl but remains above levels below $1.5/bbl seen in Q4 2024.
    • Brent APR 25 down 1.1% at 74.38$/bbl
    • WTI MAR 25 down 1.2% at 70.52$/bbl
    • Brent APR 25-MAY 25 down 0.03$/bbl at 0.28$/bbl
    • Brent JUN 25-DEC 25 down 0.16$/bbl at 2.25$/bbl
    • WTI MAR 25-APR 25 down 0.07$/bbl at 0.06$/bbl
    • WTI JUN 25-DEC 25 down 0.13$/bbl at 2.28$/bbl

 

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