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- WTI December 2025 December 2026 spread
October 21,2025
Overview
One week ago, we highlighted the abundant news wire accounts of the weakness in the crude oil curve.
In the past 24 hours, news wire accounts have focused on the large amount of oil that is said to be in transit/on the water.
Risk of a market surplus weighs as latest estimates from Vortexa cited by Bloomberg show more than 1.24 billion barrels have been amassed on the world’s tanker fleet, above levels seen in 2020. Citigroup said that OECD commercial oil inventories over the last month have risen by more than 10 MMBBL and water levels are "swelling."
But, some analysts comments suggest that the surplus is not weighing so greatly on the market and/or the forward curve. Goldman Sachs says that the oil market outlook is bearish as a surplus has started to show, although impending stock builds for November are already priced in. Another analyst says that the market structure of the crude curve had not yet shifted to levels that would encourage large stock builds, meaning that the contango in the curve is not steep enough. "This may signal a market reluctant to fully price in the anticipated surplus — perhaps reflecting expectations that the glut will prove smaller than feared," he said. "The IEA’s forecast for a massive surplus would lead to a strongly upward-sloped futures curve, called super contango, but that has not emerged so far, " UBS' analyst says. (Reuters)
One week ago, we said that the momentum for the December 2025 December 2026 spread was still negative as the spread had then fallen into contango for the first time since late June. We pointed then to support at $-1.27/$-1.29 and then $-1.77. The support at $-1.77 was almost tested yesterday with a low of $-1.67. The spread rallied to as high as $-0.98 today. Momentum today is trying to turn positive from a very oversold condition. This together with the price action of the past 24 hours suggests to us that the spread found an interim bottom yesterday.
Support for the December 25 versus December 26, we believe, comes in at today's and Friday's low of $-1.400. Below that support lies at the $-1.77 level. Upside resistance for December 2025 versus December 2026 lies at $-0.74 and then the level we cited last week of $-0.41, as being one above which the spread would be on better footing. The spread rallied very briefly last Wednesday to a high of $-0.33.
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