Brent crude’s three-month time spread is nearing the widest contango, a situation where the futures price is above the expected future spot price.
It indicates the oversupply fears are coming back to haunt markets, according to Bloomberg.
Brent oil fell by over 5.5% to $39.34 on Tuesday. That was the lowest level since June 16. At press time, the black gold is trading at $39.66 per barrel.
Rating agency Fitch raised the oil price forecast for 2020 while lowering projections for 2022.
Fitch foresees Brent prices averaging $41 per barrel in 2020, up from its June forecast of $35 per barrel. However, the agency revised the 2022 price forecast lower to $50 per barrel from $53 per barrel.