RESEARCH
Oil market surplus could be lower than expected, say ING analysts
This story was originally published at 13:40 IST on 23 July 2025
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MUMBAI – Even though market participants expect a large surplus in the oil market towards the fourth quarter of the year, analysts at ING have argued otherwise. The shape of the ICE Brent forward curve has changed drastically in the last two months, prompting the analysts to question whether the expected surplus will actually materialise.
The shape of the forward curve is in backwardation into early next year and then flat for most of 2026, before moving into a shallow contango through 2027, they said in a report titled 'The Commodities Feed: Has the oil market surplus been delayed?'. "The forward curve is not screaming that there will be a large surplus of the kind our balance sheet and many others show. The Dec-25 – Dec-26 spread also highlights this," they added.
Earlier, the forward curve was in backwardation through until the November 2025 contract and then in contango from that point, reflecting expectations of a surplus market from the fourth quarter of the year. The spread is moving to backwardation of around $0.65 per barrel currently from a contango of more than $1.80 per barrel in early May. "While we believe the surplus will still hit the market, relatively low inventories offer some support not just to timespreads, but also the flat price," the analysts said.
At 1237, the most-active October Brent crude oil contract on the Intercontinental Exchange was steady at $67.78 per barrel. End
US$1 = INR 86.44
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Reported by Ashutosh Pati
Edited by Avishek Dutta
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