Overview:
Following a brief pullback, the Brent Sep/Oct spread is trading near support around $0.70–0.80, offering a clean technical entry ahead of expiry. Despite recent softness, underlying bullish factors remain intact, and short-term strength into expiry could drive a rebound toward $1.20+. With limited time and well-defined levels, this setup presents a tactical long opportunity with tight risk and strong reward potential.
Source: Flux / flux.live
Physical and Technical Drivers of Strength
Crude market fundamentals remain supportive, with margins still elevated and no clear shift in physical tightness. The recent dip in the Brent spread appears more technical than structural, finding support near $0.70. With expiry approaching, positioning and a potential bid into the roll create a window for a short-term bounce.
Trade Idea: Long Sep/Oct Brent Spread
Trade Setup:
- Entry Level: Around $0.80 (USD/bbl)
- Stop Loss: $0.70 (risking $0.10 per barrel)
- Target:$1.20 to $1.30, offering a 4:1 to 5:1 risk/reward
- Size: 5,000 barrels (50 x 100 barrel contracts) per entry
Source: Onyx Markets
This spread trades in 100-barrel lots. For a $0.01 move, each lot equates to a $1 PnL change. With a $0.10 stop on 5,000 barrels, the risk per leg equals $500. The strategy allows for two potential entries of equal size under the same risk structure.
As a result, a trade size of 1.57 lots gives a trade size of approximately 1,000 bbl, 997 to be precise.
Why:
Technical Setup:
- Support has held recently at ~$0.70; resistance is visible near $1.30
- Current level of $0.80 provides tight stop placement and attractive risk/reward
Market Structure:
- Underlying crude market remains bullish, despite recent weakness
- Expiry is due late next week, favoring short-term positioning
Tactical Advantages:
- Expiry-driven setups allow for defined time horizon
- Expiry-driven setups allow for defined time horizon
- Ability to split size and adjust risk mid-trade
- Technical containment at support level with upside breakout potential
- Limited prompt volatility noise, allowing focus on structural drivers
Conclusion
This long spread trade seeks to capitalize on a rebound from recent support in the Brent Sep/Oct spread. The structure offers flexibility to scale in while protecting capital, with expiry acting as a natural timeframe constraint. Ideal for traders with a short-term directional bias who prefer to manage size and risk dynamically.
CFDs and spread bets are complex instruments and come with a high risk of losing money rapidly due to leverage. The vast majority of retail client accounts lose money when trading in CFDs and spread bets. You should consider whether you understand how CFDs and spread bets work and whether you can afford to take the high risk of losing your money.