The Brent time spread (the price differential between two consecutive futures contracts) is now at its lowest level year-to-date, a warning to investors that physical oil markets are still stressed despite traders optimism; that’s according to a Morgan Stanley report on the oil market published this week.
The report looks at physical market indicators outside the US, while the market has focused on better US inventory trends of late, Morgan argues that the global oil market is displaying significant signs of stress. The return of light crude barrels from Libya and Nigeria, along with lower US imports and increased North Sea supply after maintenance early this year, are the four main supply factors weighing on the weak market.
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