(Bloomberg) -- A key barometer of oil market health has slumped as strikes in France worsened sentiment amid turmoil in the banking sector.
Brent’s nearest timespread — a measure of how well supplied the market is — declined by the most since January on Friday, almost flipping into a bearish contango structure that indicates oversupply. The equivalent gauge for West Texas Intermediate also tumbled.
The largest refinery in France started halting operations over the weekend due to strikes, curbing Europe’s demand and compounding days of heavy selling at the front end of the oil futures curve. High US exports have also contributed to ample levels of supply, while swaps in the North Sea market that prices much of the world’s crude have also been flashing weakness.
There was no sign of relief on Monday, as Asian equities and oil futures declined after intervention by authorities that saw UBS Group AG agree to buy Credit Suisse Group AG and central banks boost dollar liquidity. The prompt spread for Brent narrowed further to 14 cents in backwardation.
The stubborn weakness in Europe is in contrast to the Middle Eastern Dubai benchmark, where purchases by Asian refiners have supported prices over recent weeks. Brent was trading at a premium of $1.74 to Dubai swaps, which would be the narrowest gap since February 2021, according to data compiled by Bloomberg.
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