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- WTI December 2025 December 2026 Spread
October 14,2025
Overview
Much is being made today about the weakness in the crude oil forward curve(s). Bloomberg's headline reads : “Oil contango grips 2026 as trade friction fans glut worries.” Reuters' headline reads :" US oil futures backwardation narrows to 20-month low on mounting fears of a glut." Oil Price commentary reads as follows: “The spectre of a looming contango is haunting crude oil markets, especially now that the entire WTI futures contract curve for 2026 trades below $60 per barrel, i.e. below breakeven levels for most new shale wells. Backwardation, the hallmark of sanctions-impacted 2023 and 2024, now only extends until February 2026, with a mere 70 cents separating the November and February futures contracts. "
One analyst adds :" "We are seeing increased supply from OPEC+, which combined with reports of more oil in floating storage is putting pressure on the front end of the curve, as well as seasonal refinery maintenance in the U.S.,". Additionally, today the IEA raised their supply growth forecasts for 2025 and 2026 each by 300 MBPD. The IEA thus sees a greater supply overhang forthcoming. The global oil market surplus will reach 3.6 MMBPD in the fourth quarter, compared with a 1.9 MMBPD average so far this year, the IEA said in its monthly oil report today.
The comment from Oil Price leads us to ask though : Will U.S. oil producers start to reduce output given their break evens? Is OPEC+ really going to be able to increase supply as much as they say they want to, thus adding to the surplus the IEA predicts?
Comments from a London oil conference this week from oil executives suggest a tighter oil balance in the medium to long term, while some trade house executives warn of possible supply disruptions in the shorter term.
TotalEnergies CEO said that oil production from producers outside of OPEC will start to decline if oil prices fall to $60 per barrel. ExxonMobil's CEO warned that decline rates could hit 15% per year without investment in unconventional oil and gas fields, and said that in his view oversupply will be a "short-term issue." (Reuters)
Trading houses have warned that the oil market may be overly complacent towards geopolitical risk to oil supply in 2026. The risk of future spikes driven by supply security remains with Vitol’s CEO, who said that the market is likely overly discounting chance of supply side events for next year. The Vitol CEO noted that key flashpoints represent significant production centres, citing Iran, Russia and Venezuela. He warns that a disruption to output in just one of these risk zones could see prices rise above those currently forecasted. (Market News)
The WTI December 2025 December 2026 spread has fallen into contango during the past 3 sessions for the first time since late June. Momentum says that the December 2025 will still lose some ground versus the December 2026. We see support below at $-1.27/$-1.29 and then at $-1.77. There may be some support towards $-1.00, although that is not as strong as the lower supports we mention. A move back over -41 cents will put the spread on better footing. Resistance to the upside comes in at -6/-9 cents and then at +69/+70 cents, which were the highs of just one week ago.
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This article and its contents are provided for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of any commodity, futures contract, option contract, or other transaction. Although any statements of fact have been obtained from and are based on sources that the Firm believes to be reliable, we do not guarantee their accuracy, and any such information may be incomplete or condensed.
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