Oil extends gains as futures market signals clamor for supplies
BNN Bloomberg
Oil rose for a third day with global output threats compounding already red-hot markets for physical supplies and as broader financial sentiment improved.
Brent crude breached US$117 a barrel on Tuesday, but some of the most notable moves in recent days have been in more specialist market gauges. A contract known as the Dated-to-Frontline swap -- an indicator of the strength in the key North Sea market underpinning much of the world’s crude pricing -- hit a record of more than US$5 a barrel. The rally comes amid growing supply outages in Libya and Ecuador, exacerbating ongoing market tightness.
It’s a similar picture in the shape of the futures curve. The nearest Brent futures are more than US$4 higher than the second month -- a bullish structure that indicates scarce supply. The spreads typically trade at a premium or discount of just a few cents.
Oil is up about 50 per cent this year, but the strength in physical markets has run contrary to a sharp slide in headline prices in recent weeks. While fears of a global economic slowdown have weighed on futures, demand remains robust for now. Support for crude and refined products is also coming from the risk of Russian supply disruptions amid the war in Ukraine.
