Time spreads for prompt WTI delivery flipped to a contango for the first time since July, as building crude storages put pressure on the prompt month.

• Worsening sentiment for demand is also having an impact on prompt prices, contributing to the weakness for immediate delivery and thus a flip to a contango structure.
• While the demand outlook appears weak, output from the US remains strong and is at a record level of around 13m b/d.
• While no official EIA data on Cushing stocks was announced this week, there have been two successive builds in inventories.
• A contango structure makes it favourable to capture a higher price by storing crude to sell later, thus incentivizing building stocks.
• Spreads for time periods further out remain in backwardation structure, implying the weakness is focused on the prompt month.
• WTI DEC 23-JAN 24 down -0.04$/bbl at -0.02$/bbl
• WTI JAN 24-FEB 24 down -0.02$/bbl at 0.17$/bbl

Source: Bloomberg