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Crude Backwardation Softens Despite Russia Supply Risks

OIL

Crude forward curve backwardation has softened over the last ten days despite concerns for future Russian supply disruption. Economic growth concerns and rising Chinese covid case numbers are weighing on the crude market. Both IEA and OPEC lowered their oil demand growth forecasts in their monthly reports earlier this week.

  • The WTI prompt time spread is the weakest since late September while longer dated spreads have eased back from a peak seen earlier this month.
  • Brent Jun23-Dec23 has fallen from nearly 5$/bbl on Nov 7 back to 4.2$/bbl while Dec23-Dec24 has fallen from 6.4$/bbl to 5.3$/bbl during the same time. Brent front month futures have fallen about 6.7% in that time.
    • Brent JAN 23-FEB 23 up 0.06$/bbl at 1.27$/bbl
    • Brent FEB 23-MAR 23 up 0.07$/bbl at 1.15$/bbl
    • Brent JUN 23-DEC 23 down -0.04$/bbl at 4.22$/bbl
    • Brent DEC 23-DEC 24 down -0.07$/bbl at 5.27$/bbl
    • WTI JAN 23-FEB 23 up 0.03$/bbl at 0.77$/bbl
    • WTI DEC 22-DEC 23 down -0.14$/bbl at 8.03$/bbl
    • WTI DEC 23-DEC 24 down -0.1$/bbl at 5.08$/bbl

Source: Bloomberg

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