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Crude Backwardation Strengthens on Demand Optimism

OIL

Crude time spreads have mostly followed a rally in crude futures over the last couple of weeks.

  • The Brent Jun23-Dec spread has risen from around 1.5$/bbl on 10 Jan to 3.01$/bbl today. The Brent Dec23-Dec24 spreads is up from around 3.0$/bbl to near the highest since mid November at 5.3$/bbl.
  • The strengthening spreads are supported by optimism for a demand recovery this year driven mainly from China and with concern for Russian oil supplies following the EU ban on 5 Feb.
  • Weak near term demand has kept the prompt time spreads relatively unchanged and still in contango with recent data suggesting below normal demand in US and China.
    • Brent MAR 23 up 0.5% at 86.63$/bbl
    • WTI MAR 23 up 0.6% at 81.06$/bbl
    • Brent MAR 23-APR 23 up 0.01$/bbl at -0.14$/bbl
    • Brent JUN 23-DEC 23 up 0.08$/bbl at 3$/bbl
    • Brent DEC 23-DEC 24 up 0.13$/bbl at 5.27$/bbl


Source: Bloomberg

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