Brent Settles at $109.55 as WTI Jumps to $103.66, Squeezing the Spread to $5.89 Ahead of Contract Expiry

West Texas Intermediate rose 2.2% to settle at $103.66 per barrel on Monday's CME close, its highest settlement since September 15. Brent crude fell 0.3% to settle at $109.55 per barrel on ICE. The gap between the two benchmarks narrowed sharply as traders positioned ahead of Tuesday's expiry of the front-month WTI contract, according to Reuters.

Brent-WTI spread shrinks by $2.56 in one session

Friday's settlements were $109.86 for Brent and $101.41 for WTI, a spread of $8.45 per barrel. Monday's settlements put the spread at $5.89. WTI gained $2.25 while Brent lost $0.31.

Trading in the expiring contract was thin, which exaggerates moves. Reuters reported that the front-month WTI contract expires on October 20. Brent had dropped more than $3 earlier in the session before recovering, after Washington waived some Russia-related sanctions and tariffs.

Our Friday settlement analysis covered the Brent close at $109.86 and the forecast gap between the EIA and Goldman Sachs. What changed Monday is the structure of the market, not only the level.

Backwardation: an $11 premium for prompt barrels

The more actively traded Brent December contract settled at $98.54 on Monday, down 0.5%, with more than 195,000 lots traded. Only about 26,000 lots changed hands in the expiring contract, per Reuters. The front-month price sat $11.01 above December.

In plain terms, a trader who buys a physical barrel now and sells it forward one month loses about $11 on the roll, roughly 10% of the December price. A 2 million barrel tanker cargo carries about $22 million of that penalty. The market is paying a steep premium to have crude on hand, which discourages storage and rewards immediate delivery.

That structure matches the physical squeeze we described in our report on Dated Brent trading $24 above ICE futures. Prompt barrels are scarce while the paper curve prices a calmer future.

Houthi claims target Aramco sites in Yanbu and Shaybah

The Houthis said they hit Saudi targets on Monday, including a Saudi Aramco facility in Yanbu and the Shaybah oilfield. Saudi authorities had not confirmed the claims, and Reuters could not verify them. Yanbu is the Red Sea terminus for the kingdom's East-West pipeline, the main bypass for crude that would otherwise transit Hormuz.

Separately, Iran's Revolutionary Guards said a tanker caught fire and exploded after striking a naval mine in the southern Strait of Hormuz on Sunday. The report came from Iranian media and is unconfirmed. Kpler data cited by Reuters showed Gulf crude flows averaging about 8.5 million barrels per day over seven days, down from more than 20 million the week before.

The EIA's October Short-Term Energy Outlook assumes Middle East flows stay constrained through the fourth quarter and notes that attacks on the East-West pipeline show the potential for continued volatility. Any confirmed damage at Yanbu would hit the bypass route the EIA relies on.

Forecasters bracket $100 to $110

The EIA forecasts Brent will average $105 per barrel in the fourth quarter of 2026, $14 above its prior forecast, and $84 in 2027. DBS expects crude to stay between $100 and $110 per barrel into the US midterm elections. Monday's $109.55 settlement sits at the top of both views.

The two forecasters differ on direction beyond the election. The EIA sees a $21 drop between the fourth quarter of 2026 and the 2027 average, which depends on workarounds restoring regional exports. DBS offers no post-election path in the reporting we reviewed.

SEB's Bjarne Schieldrop told Reuters that higher Hormuz export volumes may prove short-lived, since Iran could escalate attacks before the November 3 midterms. Phillip Nova's Priyanka Sachdeva said the Russia waiver does little to address physical disruption. Gelber and Associates said uncertainty over the waiver's duration limits confidence in a sustained supply increase.

What to watch Tuesday

The WTI November contract expires Tuesday, and the December contract will take over as the benchmark. If the expiring contract's premium fades, the Brent-WTI spread could widen back toward Friday's $8.45. Saudi confirmation or denial of the Yanbu claims is the other catalyst.

For Canadian producers, a WTI price above $103 supports US dollar revenue on Western Canadian Select barrels. A stronger USD price converts into more Canadian dollar cash flow, though heavy-oil discounts at Hardisty remain wide.