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OIL: Crude Backwardation Softens Further as Futures Pull Back

OIL
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Brent time spreads are following the bearish move in crude futures with the prompt spread falling to the lowest since early January despite the prospect of extended OPEC+ production cuts into H2 as widely expected by the market.

  • The market weakness was triggered by the pricing out of geopolitical risk premium in late April while market focus has switched to a more pessimistic demand outlook driven by concerns of stickier US inflation and thus delays to Fed rate cuts.
  • IEA last week revised world fuel consumption down by 140kbpd to growth of 1.1mb/d in 2024. OPEC are maintaining a demand growth forecast for 2024 at 2.2mb/d.
  • The prompt Brent spread is down to just $0.13/bbl compared to over $1.00/bbl in April. The Dec24-Dec25 spread is approaching the May 15 low of $3.94/bbl.
  • Brent Jul24 technicals show the first support at the May 15 low of  $81.05/bbl and WTI Jul 24 at $76.36/bbl.
    • Brent JUL 24 down 1.5% at 82.49$/bbl
    • WTI JUL 24 down 1.5% at 78.09$/bbl
    • Brent JUL 24-AUG 24 down 0.12$/bbl at 0.13$/bbl
    • Brent DEC 24-DEC 25 down 0.37$/bbl at 3.97$/bbl
    • WTI JUL 24-AUG 24 down 0.09$/bbl at 0.31$/bbl
    • WTI JUN 24-DEC 24 down 0.19$/bbl at 2.93$/bbl

 

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Brent time spreads are following the bearish move in crude futures with the prompt spread falling to the lowest since early January despite the prospect of extended OPEC+ production cuts into H2 as widely expected by the market.

  • The market weakness was triggered by the pricing out of geopolitical risk premium in late April while market focus has switched to a more pessimistic demand outlook driven by concerns of stickier US inflation and thus delays to Fed rate cuts.
  • IEA last week revised world fuel consumption down by 140kbpd to growth of 1.1mb/d in 2024. OPEC are maintaining a demand growth forecast for 2024 at 2.2mb/d.
  • The prompt Brent spread is down to just $0.13/bbl compared to over $1.00/bbl in April. The Dec24-Dec25 spread is approaching the May 15 low of $3.94/bbl.
  • Brent Jul24 technicals show the first support at the May 15 low of  $81.05/bbl and WTI Jul 24 at $76.36/bbl.
    • Brent JUL 24 down 1.5% at 82.49$/bbl
    • WTI JUL 24 down 1.5% at 78.09$/bbl
    • Brent JUL 24-AUG 24 down 0.12$/bbl at 0.13$/bbl
    • Brent DEC 24-DEC 25 down 0.37$/bbl at 3.97$/bbl
    • WTI JUL 24-AUG 24 down 0.09$/bbl at 0.31$/bbl
    • WTI JUN 24-DEC 24 down 0.19$/bbl at 2.93$/bbl

 

Keep reading...Show less