FINWIRES · TerminalLIVE
FINWIRES

Dated Brent-Futures Spread Above $25/bbl Signals Prompt Tightness, Steep Backwardation, EIA Says

-- Dated Brent crude spot prices surged to a premium of over $25 per barrel over the futures contract in early April, signaling acute short-term supply tightness amid ongoing flow disruptions in the Strait of Hormuz, the Energy Information Administration said in a Friday note.

"High Brent backwardation along the lines of what we've seen in recent weeks likely reflects extreme market tightness in the very short term since the closure of the Strait of Hormuz," according to the note.

The premium marks a widening of the spread between spot and futures prices, and points to acute strain in prompt supply as buyers scramble to secure immediate cargoes.

Spot prices, which reflect immediate delivery of crude, have reacted sharply to the disruption in the Hormuz, while futures contracts, which price oil for delivery in coming months and therefore embed expectations of easing supply constraints over time, have reacted less sharply.

Brent crude oil prices refer to a basket of North Sea crude grades, such as Brent, Forties, Oseberg, Ekofisk, and Troll, which is also known as BFOET.

Gradual output declines of these crude oil grades led most Brent price assessments to devise methods to incorporate the US West Texas Intermediate crude, priced at Midland, into the basket of Brent crude oil grades in 2023, according to the EIA.

Futures contracts for Brent, traded on the Intercontinental Exchange (ICE), remain the most liquid and widely referenced measure of Brent prices among financial and physical market participants.

The EIA said the front-month contract, currently representing June delivery during April trading, serves as the primary hedging and pricing tool, even as it diverges from spot-market dynamics during periods of acute disruption.

Dated Brent, in contrast, reflects physical cargoes loading from North Sea terminals, and is assessed by pricing agencies including S&P Platts, Argus and Reuters.

"As they are purchased, these crude oil volumes are then shipped by the buyer to a port facility where they can be transported to a crude oil refinery for processing into finished products," according to the EIA.

The Brent futures markets trade in backwardation under typical conditions, reflecting "the spread between the Dated Brent spot price and the front-month Brent futures price is narrow and tends to be positive."

This indicates that a barrel of crude for prompt delivery is priced higher than a barrel for delivery two months into the future.

"Typically, both prices move together on similar news and market developments," the EIA said.

Price: $156.43, Change: $-1.05, Percent Change: -0.67%

Related Articles

Research

Research Alert: CFRA Keeps Buy Opinion On Shares Of The Hartford Insurance Group, Inc.

CFRA, an independent research provider, has providedwith the following research alert. Analysts at CFRA have summarized their opinion as follows:We trim our 12-month target price by $8 to $155, valuing HIG shares at 11.3x our 2026 operating EPS estimate of $13.75 (cut by $0.45) and at 10.6x our 2027 EPS estimate of $14.65 (cut by $0.30), vs. the shares' one-year average forward multiple of 10.3x and peer average of 13x. Q1 EPS of $3.09 vs. $2.20 a year ago missed our $3.60 estimate and $3.39 consensus view. Operating revenue growth of 6.2% was in line with our 6%-10% forecast, amid 5.3% earned premium growth, 13% higher net investment income, and 7.9% fee revenue growth. Q1 written premium growth of 4% and full-year 2025 growth of 7% bode well for 2026 revenue trends as premiums are earned. Underwriting results improved significantly, with Personal Lines combined ratio improving to 87.7% from 106.1% and underlying combined ratio to 85.0% from 89.7%. Business Insurance combined ratio was stable at 94.8%. Weighing the Q1 EPS miss with HIG's decent top-line growth and discounted valuation to peers, we view the shares as undervalued.

$HIG
Research

Research Alert: CFRA Keeps Strong Buy Opinion On Shares Of Baker Hughes

CFRA, an independent research provider, has providedwith the following research alert. Analysts at CFRA have summarized their opinion as follows:We raise our 12-month target price by $14 to $82, reflecting a combination of our sum-of-the-parts (SOTP) and DCF models. For our SOTP model, we presume the oilfield services business (about 50% of BKR's franchise) to be valued at about 10x projected 2027 EBITDA (in line with major peers) and its industrial energy technology business (the other 50%) valued at 14x projected 2027 EBITDA (in line with the peer median). This blended approach, yielding a 12x multiple, implies a value of $73 per share. Meanwhile, our DCF model, using medium-term free cash flow growth of 5% per year, terminal growth of 2.5%, discounted at a WACC of 6.3%, yields intrinsic value of $91 per share. We cut our 2026 EPS estimate by $0.47 to $2.48, but we raise 2027's by $0.07 to $3.24. We acknowledge that the oilfield services business is likely to struggle in 2026 owing to the U.S.-Iran conflict, but the IET business appears quite robust and likely to be a source of both accelerating revenue growth and margins.

$BKR
Research

Research Alert: CFRA Maintains Hold Opinion In Shares Of Wab

CFRA, an independent research provider, has providedwith the following research alert. Analysts at CFRA have summarized their opinion as follows:We lift our 12-month target to $285 from $275 following WAB's Q1 earnings print, valuing shares at 24.2x our 2027 EPS outlook of $11.76 (revised from $11.46; 2026 EPS estimate up to $10.57 from $10.50), a slight premium to WAB's long-term historical multiple average given structural improvements in earnings quality. While we are cautious on signs of overcapacity in the freight market, an elevated order backlog (12-month sits at over $9 billion), internal initiatives to shore up margins, and potential synergies from M&A activity positions WAB to continue growing earnings at double-digit rates in 2026-2027, in our view. Despite tariff-related cost pressures, WAB has done a commendable job of defending margins via a mix of pricing, lean manufacturing, and pruning of lower-profit operations. Q1 results were mixed but overall positive, in our view. We maintain our Hold recommendation on shares.

$WAB