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Forget About Oil at $80. The Big Rally Is in Forward Prices

  • Brent five-year forward prices outpace gains in spot prices
  • Investors question the ‘lower for longer’ oil price mantra
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Brent crude oil grabbed all the attention after spot prices hit $80 a barrel last week. And yet, almost unnoticed, a perhaps more important rally has occurred in the obscure world of forward prices, with some investors betting the "lower for longer" price mantra is all but over.

The five-year Brent forward price, which has been largely anchored in a tight $55-to-$60 a barrel range for the past year and a half, has jumped over the last month, outpacing the gains in spot prices. It closed at $63.50 on Friday.