Brent forward curve flattened significantly over the first 12 months – Commerzbank

In the wake of the sharp fall in oil prices, the time spreads, i.e. the price differentials along the forward curves, also narrowed significantly last week, Commerzbank's commodity analyst Carsten Fritsch notes.

Brent time spreads narrow sharply on oil price drop

"The gap between the next due Brent contract and the contract maturing in one year was temporarily just over $1. The last time the price difference between these two contract maturities was lower was in December 2023. At the end of March, it was still almost $5."

"The lower price premium for oil with short-term delivery suggests expectations of a more relaxed oil market, even though the price difference widened again to more than $2 at the end of last week. It is worth noting that the price gap between the first two Brent forward contracts was back at 75 US cents on Friday and thus at a similar level to the end of March."

"A contango structure, i.e. a rising Brent forward curve, only exists from spring 2026 onwards. In view of the emerging oversupply, this would have been expected at an earlier point in time."