"Regarding Brent, You have been pointing out the lower highs on the charts and the need for it to break below the $100 level. I was wondering how the clear backwardation fits into this picture?

"As always, your view is much appreciated. Many thanks in advance!"

Eoin Treacy's view Thank you for this question which I'm sure will be of interest to other members of the Collective. Oil prices spiked earlier this year. Brent crude in particular has remained comparatively firm; holding above $100 for considerably longer than in 2008. High oil prices act as a tax on consumption and are a hurdle to economic growth. A sustained move below $100 would reduce this headwind. The fact that West Texas Intermediate is $23 lower than Brent crude highlights the USA's favourable supply situation.

Brent crude has traded in backwardation for much of the year but the spread spiked higher from August as Libya's civil war escalated. A $2 spread reflects heightened demand for the near-term contract over the next longest dated contract. Over the medium-term a progression of lower rally highs is evident since April but the pace of decline has been relatively mild. These two conditions suggest a near-term supply shortage but less bullish medium-term outlook. A sustained move above $120 would be required to question that view.