WTI Nov 2023 Jan 2024 Spread

The November 2023 ?January 2024 WTI spread fell today to its lowest value in 2 weeks. The recent sharp drop in the flat price for crude dragged the spread with it.The belief that has crept into the oil market in recent weeks is one of lower demand due to high interest rates and the rise in the dollar making commodities more expensive. Also, some might point to a somewhat relaxed attitude on the part of the U.S. towards Venezuela and Iran, allowing them to export more crude oil. This coupled with rising U.S. production has eased some of the supply concerns that had grown due to the Saudi and Russian production cuts. Overall, though, a supply deficit in the 4th quarter is still very much expected.

The Nov vs Jan spread tested support near 2.56 today, with a low of 2.53. Below that we see support at 2.17-2.20. The high today of 2.95 has tested resistance in the 2.90 area. Above that we see resistance at 3.25-3.27 and then at 3.53-3.54.Momentum still points to the spread narrowing. Rolling of length by index funds might put pressure on the spread as would further liquidation of the large bullish positions in oil that were amassed in recent months.

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