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OIL: Crude Backwardation Strong Despite Softer Front Month

OIL
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Crude front month extends the weekly decline to reverse much of gain seen the previous week, but crude curve backwardation remains strong suggesting supplies remain tight.

  • Near term crude time spreads are trading towards the high for the month supported by the OPEC+ production hikes until April and supply risks due to increased sanctions on Russia and Iran.
  • Oil front month futures are under pressure from the potential for less US Fed rate cuts in 2025, US dollar strength this week and bearish sentiment from mixed Chinese data and 2025 oversupply fears.
  • The Brent prompt spread approached the highest since late November up to $0.44/bbl yesterday compared to a recent low of $0.27/bbl on Dec. 10.
  • The longer term Jun24-Dec24 spreads are also trading near the high end of the range since September with Brent to a high of $1.47/bbl yesterday.
    • Brent FEB 25 down 0.9% at 72.2$/bbl
    • WTI FEB 25 down 1% at 68.68$/bbl
    • Brent FEB 25-MAR 25 down 0.02$/bbl at 0.41$/bbl
    • Brent JUN 25-DEC 25 down 0.12$/bbl at 1.35$/bbl
    • WTI FEB 25-MAR 25 down 0.05$/bbl at 0.38$/bbl
    • WTI JUN 25-DEC 25 down 0.1$/bbl at 1.56$/bbl

 

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Crude front month extends the weekly decline to reverse much of gain seen the previous week, but crude curve backwardation remains strong suggesting supplies remain tight.

  • Near term crude time spreads are trading towards the high for the month supported by the OPEC+ production hikes until April and supply risks due to increased sanctions on Russia and Iran.
  • Oil front month futures are under pressure from the potential for less US Fed rate cuts in 2025, US dollar strength this week and bearish sentiment from mixed Chinese data and 2025 oversupply fears.
  • The Brent prompt spread approached the highest since late November up to $0.44/bbl yesterday compared to a recent low of $0.27/bbl on Dec. 10.
  • The longer term Jun24-Dec24 spreads are also trading near the high end of the range since September with Brent to a high of $1.47/bbl yesterday.
    • Brent FEB 25 down 0.9% at 72.2$/bbl
    • WTI FEB 25 down 1% at 68.68$/bbl
    • Brent FEB 25-MAR 25 down 0.02$/bbl at 0.41$/bbl
    • Brent JUN 25-DEC 25 down 0.12$/bbl at 1.35$/bbl
    • WTI FEB 25-MAR 25 down 0.05$/bbl at 0.38$/bbl
    • WTI JUN 25-DEC 25 down 0.1$/bbl at 1.56$/bbl

 

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