Crude Oil Price Outlook: Oil Backwardation Highest in 6 Years
Oil Price Analysis and News
- Oil Watchers Await Saudi Oil Minister Press Conference
- Oil Backwardation Hints at Lengthy Supply Disruption
Crude Oil Watchers Await Saudi Oil Minister Press Conference
Geopolitical tensions in the Middle East remain at the forefront of investors’ minds with the Saudi Oil minister scheduled to speak from 18:15BST. It is expected that he will update on the severity of the damage sustained at the Abqaiq oil processing facility and the length of time it will take to return back towards full capacity. That said, a suggestion that it will take longer than a few weeks to restore the oil processing facility is likely to keep oil prices at these elevated levels.
Oil prices sees over a 6 standard deviation move.
Crude Oil Backwardation Hints at Lengthy Supply Disruption
In the futures market, backwardation (spot price at a premium to futures price) in the Brent crude 6-month futures curve has spiked to its highest since September 2013, a time at which Brent crude futures were trading above $100/bbl. As such, markets signal that the supply shortage from Saudi Arabia may be somewhat longer than a few weeks, raising the likelihood that Brent crude futures could make another move above $70/bbl. That said, reports from Saudi Aramco this morning note that customers have been told that October oil loadings are likely to be delayed.
Oil Impact on FX
Net Oil Exporters: These counties tend to benefit when the price of oil rises. This includes RUB, CAD, MXN, NOK.
--- Written by Justin McQueen, Market Analyst
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