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OIL: Crude Holds Stronger Backwardation Despite OPEC Demand Revision

OIL
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Crude backwardation continues to strengthen today after a rally in time spreads last week amid Middle East supply risks and a broader market recovery in risk sentiment which supported the flat price futures.

  • The market is holding gains despite lower demand forecast according to the latest OPEC monthly oil report amid softening China growth expectations.  The lower growth forecast adds to the market uncertainty over whether the OPEC producer group with stick to the current plan to return some supply from October.
  • The prompt spread has recovered to $0.8/bbl from a low of $0.32/bbl on Aug 6 suggesting a tighter market view.  The recovery in longer dated spread has however been more muted with Dec24-Dec25 still below start of August levels despite rising from $2.43/bbl to $3.73/bbl.
  • Technicals suggest a bear cycle in Brent futures remains in play and the latest recovery appears - for now - to be a correction.  Initial firm resistance is seen at $81.32/bbl, the 50-day EMA. 
    • Brent OCT 24 up 0.9% at 80.35$/bbl
    • WTI SEP 24 up 1.1% at 77.68$/bbl
    • WTI-Brent down 0.01$/bbl at -3.99$/bbl
    • Brent OCT 24-NOV 24 up 0.05$/bbl at 0.79$/bbl
    • Brent DEC 24-DEC 25 up 0.12$/bbl at 3.73$/bbl
    • WTI SEP 24-OCT 24 up 0.09$/bbl at 1.32$/bbl
    • WTI DEC 24-DEC 25 up 0.16$/bbl at 4.17$/bbl

 

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Crude backwardation continues to strengthen today after a rally in time spreads last week amid Middle East supply risks and a broader market recovery in risk sentiment which supported the flat price futures.

  • The market is holding gains despite lower demand forecast according to the latest OPEC monthly oil report amid softening China growth expectations.  The lower growth forecast adds to the market uncertainty over whether the OPEC producer group with stick to the current plan to return some supply from October.
  • The prompt spread has recovered to $0.8/bbl from a low of $0.32/bbl on Aug 6 suggesting a tighter market view.  The recovery in longer dated spread has however been more muted with Dec24-Dec25 still below start of August levels despite rising from $2.43/bbl to $3.73/bbl.
  • Technicals suggest a bear cycle in Brent futures remains in play and the latest recovery appears - for now - to be a correction.  Initial firm resistance is seen at $81.32/bbl, the 50-day EMA. 
    • Brent OCT 24 up 0.9% at 80.35$/bbl
    • WTI SEP 24 up 1.1% at 77.68$/bbl
    • WTI-Brent down 0.01$/bbl at -3.99$/bbl
    • Brent OCT 24-NOV 24 up 0.05$/bbl at 0.79$/bbl
    • Brent DEC 24-DEC 25 up 0.12$/bbl at 3.73$/bbl
    • WTI SEP 24-OCT 24 up 0.09$/bbl at 1.32$/bbl
    • WTI DEC 24-DEC 25 up 0.16$/bbl at 4.17$/bbl

 

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