From Bloomberg, June 12:
The oil futures curve is strengthening on concerns that Israel’s latest strike on Iran could have severe and long-lasting repercussions.
Front-month Brent prices have spiked by as much as 13%, but there’s also movement for contracts further out with timespreads rallying. The so-called smile or hockey stick pattern that’s characterized the shape of the futures curve for months — featuring a contango structure and signaling loose balances in the long term — has now all but disappeared.
The widely watched spread between the two nearest December contracts for Brent, a favorite marker for traders pricing in oil’s long-term prospects, was around $2.30 a barrel in backwardation late morning in Singapore, with the shorter-dated contract at a premium over the later one. It’s flipped sharply from the contango it’s been in over the last two months.
Other timespreads are also rallying, with Brent’s prompt spread, the gap between the two nearest months, rising to as wide as $4 a barrel to reach the highest since 2022 on an intraday basis. The three-month and six-month spreads are all also stronger. That’s been accompanied by volumes that are a lot higher than usual in the Asian session....
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