The ICE Brent front-to-second month spread fell into contango during afternoon US trade Friday, the first contango between the two contracts since July 2, 2012.
ICE May Brent was down $2.50 at $103.84/b after hitting a fresh eight-month low of $103.62/b in a late afternoon plunge. The June contract was down $2.30 at $103.85/b.
Analysts said the combination of weak macroeconomic data and poor European refining margins were having a significant effect on the prompt Brent contract, causing the recent sharp selloff at the front of the curve.
"It is all driven by the macro situation," a European crude derivatives trader said on Friday. "Maybe soon the two front month spreads will be affected by physical [after the loading programs came out], but so far this is all global economy, correction coming from equities."
The ICE front-month spread opened the trading day in a 19-cent backwardation, but narrowed sharply as poor macroeconomic data added to bearish market sentiment across the oil complex.
"[US] nonfarm payrolls were extremely disappointing and we saw an immediate selloff," Harry Tchilinguirian, head of commodity strategy at BNP Paribas, said.
"Brent has dramatically changed at the front of the curve," he said, adding that there has been a significant amount of movement in time-spreads, stressing the refinery maintenance season in Europe, uncertainty over the demand for Brent from South Korea, and the availability of competing Urals grades.
NYMEX May crude was down 80 cents at $92.46/b, holding stronger in the face of Brent's selloff, and prompting the differential between the two contracts to fall as low as $11.31/b as Brent sold off sharply during the afternoon session.
"Ultimately, a lot of the weakness [today] is down to disappointing macroeconomic data and the resistance of the US dollar," Tchilinguirian said, adding that while the dollar has pulled back from recent highs, it remains elevated compared its position at the beginning of the year.
Friday's monthly nonfarm payroll report from the Bureau of Labor Statistics was weighing on both commodity and equities markets, analysts said, particularly given the US sequestration.
"Yesterday, the rise in weekly claims gave us some pause, and today's report was not touched by the sequestration, which will only add to poor employment numbers in the months ahead," John Kilduff of the Kilduff Group said in a note.
NYMEX May heating oil was down 5.33 cents at $2.9103/gal, while ICE April gasoil was $13.50/mt lower at $874.50/mt.
NYMEX May RBOB was 3.84 cents lower $2.8603/gal.
