A month, it seems, is a long time in oil markets. In the middle of June, benchmark ICE Brent futures were in steep backwardation, with prompt prices supported by geopolitical worries over Libya and the Islamist insurgency in northern Iraq. Now, prompt Brent prices are at their lowest level since April, and the forward curve is in contango. With concerns over Iraq abating, Libyan output reviving and a light, sweet crude surplus growing in the Atlantic Basin, fears of likely market tightness in the second half of the year have morphed into anxiety that the weak global oil demand seen in the spring might extend into summer (PIW Jun.9' 14). Having reached a high of $115 per barrel in June, front-month Brent has shed more than $10/bbl over the past three weeks. Oil consumption is expected to rise by 1.8 million barrels per day between the second and third quarters, but this projection remains vulnerable to weaker economic growth, fuel switching and improved fuel efficiency.
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