Both referentials added a second weekly loss. Brent was down around 9%, while WTI subtracted 10.5%.
As part of the decline, the market structure of both oil benchmarks changed in ways that reflect concerns about declining supplies.
Crude came close to hitting all-time highs this year as Russia’s invasion of Ukraine added to those concerns.
In addition, the nearest-month futures contract soared at a gigantic premium over longer-dated ones, a sign that people are concerned about the immediate availability of crude and willing to pay handsomely to secure supply.
Those supply concerns are easing. The current WTI contract is now trading at a second-month discount, a structure known as a “contango,” for the first time since 2021, Refinitiv Eikon data showed.
This condition will also benefit those looking to put more oil in inventories for later, especially when inventories are still low.
“The deeper the contango, the more likely the market is to stock those barrels”said Bob Yawger, head of energy futures at Mizuho in New York.
Brent was still in the opposite structure, known as “backwardation,” although the nearest six-month Brent premium to barrels fell as low as $3 a barrel, the lowest since April.
China, which sources said is trying to curb crude imports from some exporters, saw Covid-19 cases rise, while hopes that aggressive rate hikes in the United States would ease have been dampened by comments from some Fed officials this week.
Source: Ambito
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