The Biggest Question For Oil Markets As Brent Breaks $40

Brent futures have broken above $40 for the first time since early March. Volatility continues to trend downwards, with the biweekly rolling average moving towards mean levels. Physical oil has also recovered, with the Dated BFOE physical benchmark nearing parity with ICE Brent futures, from a discount of $10 in April. The Dubai inter-month structure has also reverted to backwardation for the front months, after a period of super-contango. This means Arab Gulf OSPs will likely see a spike reflecting improving market structure, which would translate…