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Crude Backwardation Softens As Front Month Pulls Back

OIL

Crude curve backwardation is softening as front month crude extends a pull back assisted by the strength in the US dollar today.

  • Prompt Brent time spreads are near to lowest since Mar. 13 but are still reflecting a trend of steepening backwardation so far this year amid concern for a market deficit in Q2. OPEC+ output cuts are supportive as the markets hold a geopolitical risk premium. Upside is limited by uncertainty over US demand with just three US Fed interest rates cuts currently expected this year.
  • The Jun24-Dec24 spread is also softening to 3.83$/bbl having increased from 0.46$/bbl in mid December up to a high of 4.6$/bbl on Mar. 19.
  • Technicals show a bull cycle remains intact with first Brent resistance at the Mar. 20 high of 87.70$/bbl and support at the 20 day EMA of 83.78$/bbl.
    • Brent MAY 24 down 0.4% at 85.59$/bbl
    • WTI MAY 24 down 0.5% at 80.89$/bbl
    • Brent MAY 24-JUN 24 down 0.02$/bbl at 0.55$/bbl
    • Brent JUN 24-DEC 24 down 0.18$/bbl at 3.8$/bbl
    • WTI MAY 24-JUN 24 down 0.04$/bbl at 0.45$/bbl
    • WTI JUN 24-DEC 24 down 0.2$/bbl at 3.88$/bbl

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Crude curve backwardation is softening as front month crude extends a pull back assisted by the strength in the US dollar today.

  • Prompt Brent time spreads are near to lowest since Mar. 13 but are still reflecting a trend of steepening backwardation so far this year amid concern for a market deficit in Q2. OPEC+ output cuts are supportive as the markets hold a geopolitical risk premium. Upside is limited by uncertainty over US demand with just three US Fed interest rates cuts currently expected this year.
  • The Jun24-Dec24 spread is also softening to 3.83$/bbl having increased from 0.46$/bbl in mid December up to a high of 4.6$/bbl on Mar. 19.
  • Technicals show a bull cycle remains intact with first Brent resistance at the Mar. 20 high of 87.70$/bbl and support at the 20 day EMA of 83.78$/bbl.
    • Brent MAY 24 down 0.4% at 85.59$/bbl
    • WTI MAY 24 down 0.5% at 80.89$/bbl
    • Brent MAY 24-JUN 24 down 0.02$/bbl at 0.55$/bbl
    • Brent JUN 24-DEC 24 down 0.18$/bbl at 3.8$/bbl
    • WTI MAY 24-JUN 24 down 0.04$/bbl at 0.45$/bbl
    • WTI JUN 24-DEC 24 down 0.2$/bbl at 3.88$/bbl

Keep reading...Show less