Dated Brent Report – Strength in Chaos
The Brent futures market was taut in anticipation and volatility last week as the leak of intelligence about the, at the time, looming Israeli strike on Iran meant that the waiting game would have to continue, and there were fewer clues. The front spreads have been rangebound over the fortnight, and the DFL market has superseded this, allowing for the Dated-to-Lead (DFL vs Brent spreads) structure to swing up. The question for spreads is whether they see the support from the Dated structure ripple through the DTL reverting, or whether the anticipated heavy pressure in the futures structure will strike through the structural integrity of the curve. The physical differential dropped to around 5c on 17 Oct and has gently been implied higher since.