Oil Backwardation to Lure Buyers as Crude Market Rallies, Commerzbank Says

The prospect of backwardation in oil markets, in which earlier-delivery futures trade above contracts for later supply, is likely to lure investors as prices rise, according to Commerzbank AG.

“The present shape of the forward curve suggests further tightening on the crude oil market,” a team of analysts including Frankfurt-based Carsten Fritsch wrote in a report today. “This backwardation, which was rarely evident in the past few years, is likely to bring more buyers into the arena.”

Oil for January delivery was trading at a discount, or contango, of 35 cents to February futures on the New York Mercantile Exchange as of 6:53 a.m. local time. That’s the lowest discount since August, based on closing prices.

To contact the reporter on this story: Justin Carrigan in London at jcarrigan@bloomberg.net

To contact the editor responsible for this story: Justin Carrigan at jcarrigan@bloomberg.net

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