finance
Brent Crude Futures Curve Returns to Backwardation After Brief Contango
The September Brent contract traded at $85.79 per barrel early Wednesday, about $8 higher than the contract six months later. OilPrice.com reported the futures structure shifted as markets priced renewed Middle East supply risks.
Jul 15, 5:50 AM·1m read1 source
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The Brent Crude futures curve flipped into backwardation this week. The September contract traded at $85.79 per barrel early on Wednesday while the contract six months later stood at $77.49 per barrel, OilPrice.com reported. The first-month Brent contract reached a premium of $8.92 over the sixth-month contract, the widest since June 10, according to data compiled by Reuters.
The shift signals expectations of tighter prompt supply for the first time in a month. Markets began pricing in collapsed tanker traffic through the Strait of Hormuz and the reinstated U.S. naval blockade on Iranian oil exports.
Prices of Brent and Middle Eastern benchmarks had fallen after the U.S. and Iran signed a memorandum of understanding to launch peace talks and reopen the Strait of Hormuz and after the U.S. lifted its blockade in the Gulf of Oman.
In mid-June the Dubai and Murban futures curves flipped to contango for the first time since February 28. That structure, in which later contracts trade above prompt contracts, indicated eased concerns about immediate crude supply. The contango lasted less than a month before hostilities returned, Iran struck tankers in the Strait of Hormuz, and the U.S.
Reinstated the naval blockade.
