Brent’s ‘Scarcity Premium’ Widens to Most Since 2013 in Oil Rally

Carsten Fritsch, analyst at Commerzbank, said the surge in oil prices was due to a tight market, as shown by the 12-month forward curve and the premium at which the first-month futures contract is trading to the second.

Alex Lawler, Reuters

The structure of Brent crude oil futures is showing a “scarcity premium” that has widened to the most since 2013 this week, a sign of the tight market underpinning oil’s rally amid a wider energy crunch as economies recover from the COVID-19 pandemic.

The premium of the immediate Brent crude contract to the December 2022 price stood at $8.13/bbl on Oct. 15 after reaching $8.30 on Oct. 11. The value on Oct. 11 was the highest since 2013, according to Refinitiv Eikon data.

One of the main factors underpinning prices has been the reluctance of OPEC and allies, known as OPEC+, to ease supply cuts, made during the worst of the pandemic, more rapidly.

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