Since flipping into backwardation in late October, Nymex WTI remained in backwardation only for the first half of November. The symptom of tightness in the market did not last long though, as the market structure switched back into contango on November 14 and ended the month with the front-month versus the second-month at -10 ˘/b. Front-month WTI rose by 13c on 24 October, the first time for the front of the curve since early September 2008. The delay, or possibly the cancellation of the Keystone XL project, which will significantly cut inflows of Canadian crude into Cushing supported a reverse in the market structure back into contango. On a monthly average basis, the Nymex front-month moved from a 10˘/b discount to the second-month contract in October to flat in November.
Continuing on from the late October trend, the ICE Brent forward curve contracted sharply in November from the previous months of steep backwardation amid a rise in supply from Libya and major North Sea fields, as well as West Africa, which depressed the North Sea market amid low refinery demand. Although it remained in backwardation for the whole month of November, the premium of the first month over the second more than halved. The spread between the second and the first month averaged around 75˘/b, the lowest in three months, in November compared to $1.55/b in the previous month.
