OIL: Brent Backwardation Softens as Demand Concern Set Against Supply Risk

Brent crude backwardation has softened slightly inline with the pull back in futures prices since highs for the month reached earlier this week. The curve remains supported by the upside market risks from Middle East tensions although soft China refining data and weaker demand expectations are limiting upside moves.

• The prompt spread is today around $0.8/bbl having risen to a high of $0.93/bbl on Aug 12.  The spread is however lower than levels up to $1.18/bbl seen in July with disappointing summer fuel demand limiting market tightness.
• The Dec24-Dec25 spread has followed a similar trend down from $4.21/bbl on Aug 12 to $3.6/bbl today.
• Technicals suggest the short term outlook for the Brent Oct24 futures appears bullish with the recent rally potentially undermines the previous bearish theme. Resistance is seen at a Fibonacci retracement at $84.22/bbl while support is the Aug 5 low of $75.05/bbl.
  • Brent OCT 24 up 0.7% at 80.32$/bbl
  • WTI SEP 24 up 0.7% at 77.49$/bbl
  • WTI-Brent down 0.11$/bbl at -4.01$/bbl
  • Brent OCT 24-NOV 24 up 0.07$/bbl at 0.8$/bbl
  • Brent DEC 24-DEC 25 up 0.07$/bbl at 3.57$/bbl
  • WTI SEP 24-OCT 24 up 0.03$/bbl at 1.17$/bbl
  • WTI DEC 24-DEC 25 up 0.09$/bbl at 4.13$/bbl