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Crude Backwardation Strengthens on Supply Concerns

OIL

Crude holding positive on the day on the prospect of OPEC production cuts and supported by a weaker US dollar.

  • The uncertain supply from OPEC and Russia is supporting the forward curve backwardation despite signs that Kazakhstan supply may improve in October and after a period of steady Libya supplies around 1.2mbpd.
  • Saudi Aramco CEO today highlighted the lack of spare OPEC capacity at approximately just 1.5% of total supply. They also stated they are on target to boost oil production capacity to 13mbpd by 2027. Current Saudi Arabia crude production is 11mbpd with capacity estimated around 12mbpd.
    • Brent DEC 22 up 0.9% at 89.69$/bbl
    • WTI NOV 22 up 0.8% at 84.3$/bbl
    • Brent DEC 22-JAN 23 up 0.01$/bbl at 1.93$/bbl
    • Brent DEC 22-DEC 23 up 0.3$/bbl at 11.99$/bbl

Source: Bloomberg

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Crude holding positive on the day on the prospect of OPEC production cuts and supported by a weaker US dollar.

  • The uncertain supply from OPEC and Russia is supporting the forward curve backwardation despite signs that Kazakhstan supply may improve in October and after a period of steady Libya supplies around 1.2mbpd.
  • Saudi Aramco CEO today highlighted the lack of spare OPEC capacity at approximately just 1.5% of total supply. They also stated they are on target to boost oil production capacity to 13mbpd by 2027. Current Saudi Arabia crude production is 11mbpd with capacity estimated around 12mbpd.
    • Brent DEC 22 up 0.9% at 89.69$/bbl
    • WTI NOV 22 up 0.8% at 84.3$/bbl
    • Brent DEC 22-JAN 23 up 0.01$/bbl at 1.93$/bbl
    • Brent DEC 22-DEC 23 up 0.3$/bbl at 11.99$/bbl

Source: Bloomberg