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OIL: Oversupply Risk Weighs on Crude Curve Backwardation

OIL
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The Brent crude Dec24-Dec24 time spread has rebounded slightly after falling close the low for the month to $0.54/bbl earlier today and just above the lowest since December 2021 seen briefly in March 2023. 

  • The weakness follows the decline in futures amid oversupply risks with the prospect of higher supplies from Saudi Arabia and Libya while uncertainty still surround China and US demand growth.
  • Saudi Arabia is committed to returning production as planned in December, according to the FT, while Libya’s administrations have agreed to nominate an interim central bank governor which could allow the return of recent missing barrels.
  • Russia’s Deputy Prime Minister Alexander Novak said OPEC+ is monitoring the balance of supply and demand but there are currently no new discussions or proposals within OPEC+.
  • The prompt spread is also softening but holds slightly more support due to near term lower Russian and Kazakhstan output and with ongoing US crude inventory draws.
    • Brent NOV 24 down 2.1% at 71.95$/bbl
    • WTI NOV 24 down 2.1% at 68.22$/bbl
    • Brent NOV 24-DEC 24 down 0.04$/bbl at 0.52$/bbl
    • Brent DEC 24-DEC 25 down 0.51$/bbl at 0.94$/bbl
    • WTI NOV 24-DEC 24 down 0.02$/bbl at 0.54$/bbl
    • WTI DEC 24-DEC 25 down 0.49$/bbl at 1.54$/bbl

 

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The Brent crude Dec24-Dec24 time spread has rebounded slightly after falling close the low for the month to $0.54/bbl earlier today and just above the lowest since December 2021 seen briefly in March 2023. 

  • The weakness follows the decline in futures amid oversupply risks with the prospect of higher supplies from Saudi Arabia and Libya while uncertainty still surround China and US demand growth.
  • Saudi Arabia is committed to returning production as planned in December, according to the FT, while Libya’s administrations have agreed to nominate an interim central bank governor which could allow the return of recent missing barrels.
  • Russia’s Deputy Prime Minister Alexander Novak said OPEC+ is monitoring the balance of supply and demand but there are currently no new discussions or proposals within OPEC+.
  • The prompt spread is also softening but holds slightly more support due to near term lower Russian and Kazakhstan output and with ongoing US crude inventory draws.
    • Brent NOV 24 down 2.1% at 71.95$/bbl
    • WTI NOV 24 down 2.1% at 68.22$/bbl
    • Brent NOV 24-DEC 24 down 0.04$/bbl at 0.52$/bbl
    • Brent DEC 24-DEC 25 down 0.51$/bbl at 0.94$/bbl
    • WTI NOV 24-DEC 24 down 0.02$/bbl at 0.54$/bbl
    • WTI DEC 24-DEC 25 down 0.49$/bbl at 1.54$/bbl

 

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