ICE Brent Spikes 7% Initially in Response to Operation Rising Lion, Rallies Before Dropping 2%

ICE Brent, specifically the August 2025 future (July is no longer trading) went from just below $70 a barrel ($69.36 to be precise) to 74.23 USD per barrel from June 12th to June 13th during Operation Rising Lion. Futures continued to rally over successive days, peaking at 78.85 USD per barrel on June 19th. 

Oil Falls on Demand Concerns, Brent at $72 a barrel

Oil has fallen amid concerns over slowing growth and lesser demand from China. Brent is at $72 a barrel, and WTI at $69 a barrel.  The Brent-TI premium stands at $3. China state-owned refiner Sinopec said Chinese demand could peak in 2025. BP has a partnership with Sinopec in ethylene derivatives.

The Rise of Brent Crude's K22 Contract

Front-month Brent futures, represented by the May 2022 contract (K22) peaked at $128 a barrel on Tuesday March 8 2022. 

It crossed to over $100 a barrel at the start of March following Russia's invasion of Ukraine on 24 February. K22 is currently trading at $116 a a a barrel with 102K contracts traded with an intraday rise of 4.7%.

The Brent curve is in backwardation with the June 2022 (M22) contract trading at $112 (rounded to the nearest dollar), with the front month trading at $4 per barrel premium, with a similar premium for July (N22) trading at $108 per barrel.

Not until the October 2022 (V22) contract do we see oil dipping below $100 a barrel.

We see similar backwardation and spreads in future pricing on the NYMEX WTI Curve. With WTI all the volume is on the front month with 104K contracts (and counting) traded on 10 March 2022. Comparing front month contracts. Brent is at a $3 premium to WTI.

Backwardated Brent Futures Curve Retains Lofty Front Month Price

Brent Dec 21 futures have been hovering upwards through the 80s levels all through October 2021 peaking at 86.4 then dropping to 84.3, still above the Jan 22 futures at 83.5. 80+ levels are reflected across all contracts out to April 2022.

Brent front month premium to WTI is $1.10; with WTI Dec 21 futures trading at 83.2. WTI has a much sharper gradient in terms of backwardation, suggesting prices will rock down faster than for Brent.

Brent Premium is $2 over WTI

 Brent rises to around $74 and WTI is around $72.

Brent Reaches $70 a Barrel on US-Iran tensions

The Brent March 2020 (front month) contract reached $70 a barrel.  Front month Nymex WTI in contrast hovered at $64 a barrel (Feb 2020). Both curves were in backwardation. Gold was trading similarly high around $1580 led by the Feb contract. Gold and silver remain in contango. Stocks overall are down with oil majors bucking the trend (Shell up 1.17% in UK trading - RDSA, BP up 1.81% in US trading - NYSE:BP).