OIL: Crude Time Spreads Near Recent Lows Despite Gains This Week

Crude curve backwardation has strengthened as futures have rallied on Middle East supply risks, but time spreads remain below levels seen for much of this year. Backwardation remains soft as escalating conflict has not led to disruption to physical oil flows yet while OPEC+ plans to bring back supply from December could drive a potential market surplus next year.

• The market also remains uncertain of the impact on oil demand growth from the recent China economic stimulus measures and the US Fed rate cut while recent US fuel demand continues to hold just below normal.
• The Dec24-Dec25 spreads in September fell to the lowest since late 2021 and below a peak from Sept. 19 despite the rally this week. The Brent Dec24-Dec25 spread is up from $0.66/bbl on Aug 26 to $2.29/bbl yesterday but was trading between $3/bbl to $4/bbl in August. The WTI spread has rebounded from $1.11/bbl to $2.9/bbl this week.
• The prompt spread is also still holding near to range lows with Brent at $0.41/bbl despite recent gains.  The Brent spread has bounced between $0.24/bbl and $1.18/bbl since the start of July with soft demand set against several near term supply disruptions such as in Libya, the U.S. and Kazakhstan.
  • Brent DEC 24 up 1.8% at 75.23$/bbl
  • WTI NOV 24 up 1.9% at 71.46$/bbl
  • Brent DEC 24-JAN 25 up 0.04$/bbl at 0.4$/bbl
  • Brent DEC 24-DEC 25 up 0.19$/bbl at 2.01$/bbl
  • WTI NOV 24-DEC 24 up 0.04$/bbl at 0.45$/bbl
  • WTI DEC 24-DEC 25 up 0.21$/bbl at 2.32$/bbl