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Supply Concern Drives Brent Mar-Apr Spread Into Backwardation

OIL

Brent prompt spread moves into backwardation for the first time since 4 Jan.

  • Concern for weak near term demand had kept the spread in contango for most of the most so far but the potential for a further supply disruption from the EU ban on Russian products next month and a demand recovery are supporting prices.
  • Last month Russian Deputy Prime Minister Novak said sanctions could cause a temporary drop of 500k to 700kbpd in Russian production. IEA last week estimated a drop of 1.6mbpd by the end of Q1 2023 to 9.7mbpd compared to levels seen before the Ukraine war. Bloomberg estimate Russian output was 10.9mbpd in December.
    • Brent MAR 23 up 0.5% at 88.06$/bbl
    • WTI MAR 23 up 0.4% at 81.98$/bbl
    • Gasoil FEB 23 up 2.1% at 1004$/mt
    • Brent MAR 23-APR 23 up 0.06$/bbl at 0.01$/bbl
    • Brent APR 23-MAY 23 up 0.03$/bbl at 0.2$/bbl
    • Brent JUN 23-DEC 23 up 0.13$/bbl at 3.24$/bbl
    • Brent DEC 23-DEC 24 up 0.15$/bbl at 5.64$/bbl

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