Brent December Settles at $109.55 as Its Premium to January Widens to $3.48 Before WTI Expiry

ICE Brent December futures settled at $109.55 per barrel on Monday, Oct. 19, down 31 cents from Friday's settlement of $109.86, while the January contract fell 75 cents to $106.07, according to ICE settlement data. The premium of December over January widened to $3.48 from $3.04, a sign that buyers are paying more for nearer barrels even as the outright price eased.

Brent December-January Spread Widens to $3.48 a Barrel

The December-January spread was $2.75 on Oct. 15, $3.04 on Oct. 16 and $3.48 on Oct. 19, Oil Authority calculations from ICE settlements. On a 2 million barrel very large crude carrier cargo, a $3.48 one-month spread is worth about $7.0 million to a holder who can deliver in December rather than January. A steeper backwardation discourages storage and rewards immediate delivery.

The physical market shows the same pattern. The U.S. Energy Information Administration's Europe Brent spot price was $118.82 per barrel on Oct. 19, $9.27 above the December futures settlement. That gap was more than $20 for four sessions the previous week, as covered in our report on the spot premium.

Cushing WTI Spot Reaches $110.01 Before November NYMEX Expiry

The NYMEX November WTI contract expires on Tuesday, Oct. 20, three business days before the 25th of the month, and the December contract then becomes the front month. The EIA's WTI spot price at Cushing, Oklahoma, was $110.01 per barrel on Oct. 19, up from $108.21 on Oct. 16 and $94.99 on Oct. 12, a gain of $15.02 in five sessions.

At $110.01, Cushing spot crude priced $0.46 above ICE December Brent futures, though still $8.81 below EIA's Europe Brent spot price. Alberta Treasury Board and Finance reported front-month WTI futures at US$97.97 on Oct. 15, when EIA's Cushing spot was $104.71, a spot premium of US$6.74 over the expiring contract, Oil Authority calculations.

UKMTO Logs 12 Attack Reports From Oct. 12 to Oct. 17

UK Maritime Trade Operations logged 12 attack reports dated Oct. 12 to Oct. 17, numbered 166 to 177. They included two tankers struck 68 and 78 nautical miles northeast of Al Jubayl, Saudi Arabia, on Oct. 16, one of them by a rocket-propelled grenade fired from a small boat, and a tug struck by two projectiles northeast of Khor Fakkan, United Arab Emirates. On Oct. 17, UKMTO reported that a skiff fired two shots at an LNG tanker 140 nautical miles southwest of Al Mukalla, Yemen, before the tanker's security team fired warning shots.

IEA Puts Gulf Crude Exports at 13.9 Million Bpd; EIA Forecasts $105 Brent

The International Energy Agency said in its Oct. 14 Oil Market Report that Gulf crude exports reached 13.9 million barrels per day in September, more than 75% of pre-war levels, while product exports remained less than half of pre-war volumes. The EIA estimates Middle East crude production shut-ins averaged 4.77 million barrels per day in September and forecasts 4.47 million in the fourth quarter.

The EIA forecasts Brent spot at $105 per barrel in the fourth quarter and $87 by the second quarter of 2027, as bypass routes, ship-to-ship transfers and new pipeline capacity in the United Arab Emirates reduce shut-ins. It said the attacks on Saudi Arabia's East-West pipeline highlight the potential for continued volatility in physical flows. Our report on Friday's settlement compares that forecast with the market.

Alberta WCS Discount Holds Near US$25 Below WTI

Alberta reported the WTI-WCS differential at US$24.96 on Oct. 15, implying Western Canada Select near US$73.01. Canadian producers benefit from a higher WTI price, but the gain is limited while the heavy oil discount stays near US$25, as covered in our WCS report.

WTI Expiry on Oct. 20 and EIA Inventory Report on Oct. 21

Tuesday's WTI expiry will reset the U.S. benchmark to the December contract. The EIA's weekly petroleum report on Wednesday, Oct. 21, will show whether U.S. crude inventories continue to fall after an 8.56 million barrel draw in the week ended Oct. 9. That report put commercial crude stocks at 415.6 million barrels and crude exports at 4.57 million barrels per day, while domestic production fell 300,000 barrels per day to 13.68 million. A further draw would add to the case that the U.S. market is tightening alongside the physical market in Europe.