(Reuters) – The backwardation on ICE gasoil deepened on Thursday as traders said recent lower Russian exports supported the front month.
By 1552 GMT, the May contract was trading at a premium of $3.75 a barrel to the June contract, in the market structure known as backwardation, and at almost $1 over Wednesday’s settlement level.
Backwardation can either indicate a tighter market or strong current demand. “Demand has been pretty low from the beginning of the year,” one trader said. “With Russian exports low and a stronger U.S. market, people probably see more tightness in the market, thus steepening the backwardation.”