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OIL: Market Expects Oil to Flip into Contango in H1 2025

OIL
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Despite market volatility due to ongoing geopolitical risk, traders told Bloomberg that crude will likely flip into a contango 

  • Oil has been backwardated for most of the last two years, a more bullish structure, but prompt contracts for both Brent and WTI are expected to flip into contango for H1 2025.
  • This would mean investors lose money on rolling contracts.
  • The extent of the overhand is up for debate, with one trading house telling Bloomberg that the market expects a surplus of 0.7m b/d. Macquarie expected a supply surplus of 1m b/d.
  • A contingent factor is how much supply OPEC returns to the market, but any return will come just as output in the Americas rises further.
  • Macquarie expects the contango to be the steepest in Q2, when refineries in the US and Europe carry out maintenance ahead of summer driving season.

 

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Despite market volatility due to ongoing geopolitical risk, traders told Bloomberg that crude will likely flip into a contango 

  • Oil has been backwardated for most of the last two years, a more bullish structure, but prompt contracts for both Brent and WTI are expected to flip into contango for H1 2025.
  • This would mean investors lose money on rolling contracts.
  • The extent of the overhand is up for debate, with one trading house telling Bloomberg that the market expects a surplus of 0.7m b/d. Macquarie expected a supply surplus of 1m b/d.
  • A contingent factor is how much supply OPEC returns to the market, but any return will come just as output in the Americas rises further.
  • Macquarie expects the contango to be the steepest in Q2, when refineries in the US and Europe carry out maintenance ahead of summer driving season.

 

Keep reading...Show less