Back to backwardation

摘要

A major plank of the Opec and non-Opec production deal is addressing the massive stocks overhang that has built up over the past two years. Opec's policy of pursuing market share in 2015-16 helped push OECD oil stocks - still the most reliable industry measure - to their highest recorded level in July last year. Higher demand towards the end of 2016 began to draw that surplus down by 750,000 b/d in the second half of the year. The output deal is accelerating that process. Forward crude markets reveal this reality long before the inventory data are in.