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Russia-Ukraine War 2026
1APR

Brent round-trips the squeeze as backwardation holds

3 min read
16:30UTC

Brent settled $92.69 on 11 June, down 5.3% from Monday's $97.82 squeeze peak, but an $8.43 backwardation says the market is tight, not resolved.

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ConflictDeveloping
Key takeaway

Brent's 5.3% slide masks steep backwardation, leaving the structure tight not resolved.

Brent settled $92.69 on 11 June, down from the $97.82 short-squeeze peak on 8 June, a 5.3% reversal across three sessions on US-Iran peace hopes after Washington signalled its latest strikes complete.⁠1 Brent-WTI compressed toward $1.70, tighter than the roughly $2 band at end-May. The flat price reads as a story resolved. Curve structure reads the opposite.

CFTC (Commodity Futures Trading Commission) data for the week to 2 June put NYMEX Brent Last Day managed money at +6,799 net long, down from +9,568 a week earlier; managed money on ICE Futures Europe's WTI contract was net short -26,694, while NYMEX WTI managed money held +90,765.⁠2 Managed money here means hedge funds and other speculative accounts. The data show no Brent short base behind Monday's spike: the Brent Last Day book was small and long.

The six-month spread held near $8.43/bbl of backwardation, front month over December 2026, through the entire flat-price slide.⁠3 Backwardation that steep makes floating storage uneconomic, because a trader buying prompt to sell forward loses money on the roll, and it keeps the gasoil crack supported even as headline Brent falls. The curve says tight; the flat price says resolved. Fading the round-trip means selling a structurally backwardated market, which is a setup for the next squeeze rather than a trend to ride.

Deep Analysis

In plain English

Oil traders often bet on whether the price of oil will go up or down. When a lot of traders bet on lower prices at the same time called a short position they create a pressure-cooker effect. When news suddenly makes the price jump (in this case a conflict event), all those traders have to rush to close their bets at once, which drives the price up sharply. That is exactly what happened here. The price jumped from around $93 to nearly $98 in a day, then fell back once the scare passed. But underneath that noisy flat-price move, the oil market still thinks near-term supply is genuinely tight visible in what is called a backwardated forward curve, meaning oil for immediate delivery costs much more than oil for delivery in six months. That tight-supply signal has not changed, even though the headline price bounced around.

Deep Analysis
Root Causes

The violent round-trip from $97.82 to $92.69 in three sessions has two distinct root causes operating simultaneously.

First: the positioning structure. CFTC data for the week to 2 June show no Brent short base: NYMEX Brent Last Day managed money was net long +6,799, so the squeeze cannot be traced to crowded Brent shorts in that dataset.

Second: the curve structure. At $8.43/bbl of backwardation, floating storage is uneconomic and the physical market is paying a premium for prompt delivery. That backwardation is not in the managed-money positioning it lives in the forward curve which means it does not reverse when managed money changes its position. The result is a flat price that can move $5 in either direction on headline flow while the crack and curve structure holds.

What could happen next?
  • Risk

    With managed money net short at -57,280 contracts, a fresh geopolitical shock before the 13 June CFTC print would trigger another short-covering spike, repeating the 8 June pattern and potentially retesting the $97 level.

    Immediate · Assessed
  • Consequence

    Brent-WTI compression toward $1.70 reduces the transatlantic crude arb economics for US shale barrels moving to European refiners, compounding the already-closed distillate export route.

    Short term · Assessed
  • Meaning

    The divergence between Brent's volatile flat price and its stable backwardation structure signals that headline-driven trading is dominating futures flow, while physical tightness is repricing through the curve the two markets are running on different information.

    Short term · Assessed
Sources:Trading Economics·OilGasStorageNews·CFTC
Mentions:Brent Crude →West Texas Intermediate →ICE Gasoil →Kpler →Energy Aspects →Iran →OPEC+ →OPEC →Brent-WTI →Washington →CFTC →
First Reported In

Update #7 · Distillate deficit deepens as runs max out

Trading Economics· 11 Jun 2026
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Causes and effects
Caused by
Brent jumps 5.08% on Monday short-squeeze
The $97.82 short-squeeze peak of 8 June is the origin price from which the 11 June $92.69 round-trip reversal is measured.
Occurred 8 Jun 2026
Read story →
ICE WTI book short as NYMEX WTI stays long
CFTC data showing Brent managed-money net short at -57,280 is the positioning data that explains both the squeeze violence and the reversal speed.
Occurred 8 Jun 2026
Read story →
Money trims WTI and Brent length
The prior 109,000-contract Brent long built from +52,000 then reversed to the -57,280 net short that drove the squeeze.
Occurred 26 May 2026
Read story →
This Event
Brent round-trips the squeeze as backwardation holds
A trader fading the round-trip is short a structurally backwardated market, a setup for the next squeeze rather than a trend.
Led to
Longs rebuilt into an 8-week low
Brent's -57,280 net short (ID:4104) under the $92.69 settlement is the base that flipped to +7,755 net long in the same week, a ~65,000-contract reversal into the 12 June break.
Occurred 12 Jun 2026
Read story →
Different Perspectives
Bulgarian government
Bulgarian government
Bulgaria's Prime Minister, Rumen Radev, said the sinking of HS Dignity "benefits the Russian Federation" while saying Bulgaria lacked solid evidence to accuse anyone, and Defence Minister Dimitar Stoyanov asked NATO for air defence on 16 October. The request comes from a government that stopped state military aid to Ukraine in June.
Radoslaw Sikorski
Radoslaw Sikorski
Poland's foreign minister challenged Elon Musk on X after SpaceX capped Ukraine's Starshield terminals on 14 October. Poland pays about $50m a year for Ukraine's Starlink subscriptions, so Warsaw speaks as the paying customer as well as the ally.
Andy Burnham
Andy Burnham
Burnham fast-tracked £10m of a £45m air-defence missile delivery when Zelenskyy visited London on 14 October, and his ministers are lobbying allies to ban maritime services for Russian liquefied natural gas. The measure targets insurers and shipowners, many of them in London, rather than the gas itself.
Ministry of External Affairs (India)
Ministry of External Affairs (India)
India's foreign ministry said after the 16 September House vote that New Delhi would take all necessary measures to protect its trade.
European Council
European Council
EU leaders on 15-16 October rejected a US idea to hand Washington the roughly €200bn of frozen Russian assets held in Europe, and Kaja Kallas said the decision belongs to Europeans. The same summit put off a decision on financing Ukraine, saying leaders "will revert to the issue in a timely manner".
Donald Trump
Donald Trump
Trump signed the 16 October order that sets the Graham Act's duties and waives them under section 115(a), with a certification sent to Congress. He says the United States has not stopped sharing intelligence with Ukraine, and on 11 October he said both sides had agreed to halt attacks on energy infrastructure.

Written with AI from Lowdown's published reporting. Not individually reviewed by an editor. Editorial standards.