Brent Contango Widest Since 2018

Oil

There has been a rise in interest in short-term floating oil storage as the contango in the Brent oil futures market that emerged last week has widened as the surplus of crude is expected to grow and freight rates have fallen. The Brent market flipped into contango last week for the first time since July 2019 as the outbreak of the coronavirus in China hit oil demand (prompting large refinery run cuts) and triggered a sharp fall in crude prices. This put prompt prices below forward prices, with the 6-month Brent contango spread from April to October widening to around $1.22/bbl on 10 February, the widest since December 2018.