BLOOMBERG.COM
On the surface, the recovery of the global oil market is firmly in place, signaling an end to two years of oversupply and collapsing prices. However, one key indicator is warning of turbulence ahead. Crude’s rally stalled near $50 a barrel in the past month and the one-year price contango -- where near-term deliveries are cheaper than those a year ahead -- has almost doubled. That’s a signal that demand from refiners could be weakening. When the same thing happened last summer, a fragile oil rebound gave way to a renewed rout.
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On the surface, the recovery of the global oil market is firmly in place, signaling an end to two years of oversupply and collapsing prices. However, one key indicator is warning of turbulence ahead. Crude’s rally stalled near $50 a barrel in the past month and the one-year price contango -- where near-term deliveries are cheaper than those a year ahead -- has almost doubled. That’s a signal that demand from refiners could be weakening. When the same thing happened last summer, a fragile oil rebound gave way to a renewed rout.
Read more>