HOUSTON/LONDON : Physical oil prices around the world have begun to sag alongside futures, reflecting less alarm over Russian-led supply disruptions along with heightened worries about a possible global economic slowdown.
The market for prompt oil supplies has slowed, traders told Reuters, with offers slumping for West African, North Sea, Mediterranean and Middle East crudes. Chinese state refiners and South Korean refiners may buy as prices become attractive, but weak margins on lower demand has reduced their purchasing power.
"Russian supplies are going to stay around for at least the near future, and the idea of a price super-cycle is now very unlikely," said a second physical crude trader. Backwardation - the premium at which futures are traded in later months - for both Brent and U.S. oil has dropped from record highs in March to its narrowest since April. That implies prompt supply is less tight."The super-backwardation is disappearing before our eyes here," said Robert Yawger, director of energy futures at Mizuho Securities.