Flip in Brent structure points to drop in oil stocks

LONDON (Reuters) – Brent oil futures have shifted into backwardation, a market condition that points to expectations of a tighter supply/demand picture that could shrink plentiful crude stocks.

The return of backwardation — where crude for nearby delivery costs more than crude further forward — could provide a signal for OPEC that crude oil supplies are no longer as abundant, potentially paving the way for a production increase.


“With backwardation, the market is starting to price in a very large crude oil draw,” said Olivier Jakob, of oil consultants Petromatrix.

“I think OPEC is waiting to see if those big draws materialize or not.”

Reuters