Oil: Anchored at sea – Rabobank

Strategists at Rabobank expect to see spot Brent crude oil prices anchored near the $30/bbl level until the massive glut of floating crude inventory begins to get worked down.

Key quotes

“We view the recent strength in the calendar spreads as premature and likely to stall out and reverse under the weight of the coming surge of imports. This dynamic will work to support the back of the curve as spot Brent prices remain anchored at the $30/bbl level.”

“We expect the high crude oil inventory levels to weigh on the curve structure and pressure calendar spreads back lower.  The back end of the crude forward curves should remain supported as a result of this expected spread weakness.”

“We continue to view the back of the oil curve as having very attractive risk/reward metrics at current levels. It would not surprise us to see the back of the curve lead the market higher if and when global demand ultimately recovers.”