Crude Oil Spread July 24 vs Jan 25
Mimicking the strength in the front end of the crude curve, the July 2024 WTI has risen to a premium of $5.13 versus January 2025 WTI. That is the widest premium ever for this relationship.
Rising refinery runs in the U.S. over the past few weeks has thus increased demand, supporting the front end of the crude curve.
OPEC+ keeping their production cuts intact into the 2nd quarter has also been supportive. The news from Russia last week that they would decrease production further by the end of June is further supportive. And then yesterday, news surfaced that Mexico is cutting some oil exports over the next few months.
Heightened geopolitical tensions are likely also aiding the strength in crude oil.
Money managers having boosted their long position in crude oil has also aided the uptick in crude prices and thus the curve with it. Quantum Commodities reporting today that funds are the most bullish on crude in 6 months as Russia tensions rise.
Technically the July 2024? January 2025 spread is trading at its best value ever, having pierced some resistance that was in place during the last 10 days of March. That resistance at about $4.50 should provide near tern support for July on a pullback. Below that support is seen at the $3.80 area. Momentum favors the July still gaining on January. The only drawback to the bullish narrative for the spread is the fact that it is bumping up against the upper bollinger band on the spread's daily chart. For now that band lies at about $5.05. Resistance above is likely at the $6.12/$6.20 area when looking at prior price action from the DC chart for the front end 6 month spread.We wonder if the July24 Jan25 spread will be supported over the coming days when the index funds move longs from the front May contract to July as per their index roll.
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