Three global oil benchmarks — ICE Brent, NYMEX WTI, and DME Oman — remained in backwardation, but uncertainty about the short-term oil demand forecasts flattened the backwardation forward curves.
- The decline in seasonal crude demand in Asia and the prospect of rising oil supply also contributed to the softening of the curves.
- Meanwhile, forecasts of a supply/demand deficit in the second half of 2021 retained the market structure in backwardation, irrespective of the sharp oil price drops in August.
- In August, Brent backwardation eased, following pressure from massive crude supply in the Atlantic Basic and the availability of unsold oil volumes for quick leading and softer demand.
- Concerns about the spread of the COVID-19 delta variant that threatened to slow demand also led to the flattening of the oil futures forward curves.
The ICE Brent 1st to 3rd month spread contracted month-on-month to stand at $1.15/b on average compared with $1.55/b posted in July. US Gulf Coast refinery margins extended gains recorded in August, rising to a post-pandemic record high of $15.48/b.
CL1! up +2.01%, USOIL up +1.77%Source: Organization of the Petroleum Exporting Countries