Alex Longley / Bloomberg
As if a mini-collapse in oil prices wasn’t bad enough for OPEC, the pattern in which futures contracts are trading years from now has flipped into the worst possible structure for the exporter group.
Brent and West Texas Intermediate crudes, down almost 15 percent since late May, are both trading in contango, where forward prices get higher all the way into the next decade. While it’s a structure that normally denotes weak demand for spot cargoes, the price pattern could also be bad news for the Organization of Petroleum Exporting Countries as it can sometimes tempt producers outside the group to lock in output for future years.
(Source: NYMEX / Bloomberg)