by GoldMoney Staff
Gold Money
Oil prices have sold off meaningfully from their recent highs. Brent and WTI crude oil lost $4.51/bbl and $4.89/bbl, respectively, from $91.17/bbl and $86.91/bbl (see Exhibit 1) at the time of writing.
Exhibit 1: Oil prices corrected sharply from their peaks
[…] It wasn’t just oil flat prices that came under pressure. Time-spreads in both Brent and WTI are also sharply off their highs. For example, the 6-month Brent time-spread (June-December) is down to $3.59/bbl at the time of writing, after trading as high as $5.61/bbl just two weeks ago (see Exhibit 2). Oil time-spreads tend to reflect physical tightness in the market. When oil availability is tight, time-spreads tend to trade in backwardation, meaning prompt prices trade above forward prices. A market with ample supplies is trading in contango, where prompt prices trade below forward prices.