Brief relief

摘要

Oil markets are tightening, supporting a more than 20pc rise in prices this month. As ever, clear evidence from fundamental reports lags pricing, the most reliable leading indicator of all. But signs are emerging from physical markets of a drawdown from record oil stocks. And projections of supply and demand from forecasting agencies show July-September to be the tightest quarter in nearly three years (see graph). The problem for producers preparing to meet in Algeria next month is that these conditions are unlikely to last for very long. Atlantic basin benchmark North Sea Dated has risen by $10/bl to $50/bl this month. The speed and scale of the rally has come as a surprise after months of bearish fundamental news. Downgrades to global economic growth projections are feeding into oil demand measures. Record Opec output and a recovery in non-Opec production are also preventing the market from balancing. But supply will exceed demand by just 200,000 b/d this quarter, Argus projects, the smallest surplus in the balances in three years.