Gold has for years been the measure of all things on the commodities markets. While the precious metal raced from one high to the next, the “black gold” led a truly shadowy existence. From about mid-2022, futures contracts on Brent began a downward trend. Recently, though, the primary energy source has rebounded impressively, with North Sea Brent posting a rise of more than three quarters since the turn of the year. The upturn correlates directly with what is happening in the Middle East. Once again, the region is going through war following Israel and the USA’s joint attack on Iran. The conflict led to concerns about the possibility of bottlenecks in global energy markets. Until the latest escalation, experts firmly expected that there would be an oversupply in 2026 and that global inventories would continue to rise.
The fears of a new energy crisis are not only being expressed in the current prices – the forward curve also speaks for itself. Brent is in perfect backwardation, i.e. the next futures contract to mature is priced higher than its counterparts maturing in the future. Specifically, market players are willing to pay a premium of around 35% for delivery in June 2026 compared to delivery 12 months later. Futures markets are in fact pricing in storage and insurance costs, which means that the price of the commodity rises the further in the future the delivery date is. This situation is known as contango. The shape of the forward curve is also felt directly by investors looking to take a permanent position in the oil market, because they are reliant on the regular exchange of maturing contracts. Whereas backwardation generates rolling profits, contango has negative consequences.
The uncertainties of futures trading do not stop at the Leonteq Brent Crude Oil Futures Total Return Index. This barometer is knitted together using a classic pattern, i.e. it rolls from one future to the next month after month. The Leonteq Brent Crude Oil Futures Total Return Index thus profited from the recent backwardation. However, this effect can turn into a negative as soon as the forward curve goes into contango. Leonteq launched an ETP to enable investment in the Brent index. The participation product can be traded on each trading day of the SIX Swiss Exchange and the BX Swiss. The administration fee comes to 0.45% p.a. For this, investors also benefit from a special collateralisation, which reduces the issuer risk.
Shares in the sector are a viable alternative to a position in the oil price itself. It is hardly surprising that the share prices of leading multis have risen sharply of late. The enormous momentum should also bring traders to the table, as they can take short-term positions with the aid of leveraged products. Speculation on a rise in prices is just as possible as am exposure to the short side. The bearish products convert falling prices into profits using leverage. Whether Shell, TotalEnergies, Chevron or Exxon Mobil, Leonteq’s large pool of underlying assets includes both European oil and gas companies and their competitors from North America. The Zurich fintech has around 140 mini-futures, warrants and warrants with knock-out on the above quartet alone. Alongside the large selection, investors also profit from a first-class service, narrow spreads and long trading hours.
We look forward to answering all of your questions about our products and how they are traded. Please don't hesitate to get in touch! Phone: 058 800 11 11, email info@leonteq.com or contact us here.