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According to analysts from Rabobank, the record build-up in inventory will need to be financed in the interim which should weigh heavily on the oil forward curve. For the mentioned reason, they view the recent strength in the calendar spreads as premature and likely to stall out and reverse under the weight of the coming surge of imports. The dynamic will work to support the back of the curve as spot Brent prices remain anchored at the $30/bbl level, estimate Rabobank analysts. 

Key Quotes: 

“We expect to see spot Brent crude oil prices remain anchored near the $30/bbl level until the massive glut of floating crude inventory begins to get worked down. In fact, we expect to see this week’s onshore crude draws reversed in the weeks ahead as more and more crude oil comes to port.”

“We also expect the high crude oil inventory levels to weigh on the curve structure and pressure calendar spreads back lower. The back end of the crude forward curves should remain supported as a result of this expected spread weakness. Further to that point, we continue to view the back of the oil curve as having very attractive risk/reward metrics at current levels. In fact, it would not surprise us to see the back of the curve lead the market higher if and when global demand ultimately recovers.”