Brent spread flipped into a small contango. Contango is a situation where the futures price of a commodity is higher than the spot price.
Reason: Physical crude markets are indicating that demand is lower, much more so than the futures market.
Background: a. New pandemic curbs; b. Slow vaccine rollouts in Europe
Boris Johnson has warned the effects of a third wave of coronavirus will “wash up on our shores” from Europe.
Extended lockdowns are being driven by the threat of a third wave of infections, with a new variant of the coronavirus on the continent. Continental Europe is tightening the coronavirus measures and thereby further restricting mobility.
This is likely to have a correspondingly negative impact on oil demand.