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Subject
Oil inventories and price swings.
Significance
Growth in oil inventories has slowed markedly, indicating that the supply-demand balance in the oil market is changing from a position of oversupply to one of shortage. However, any rise in spot prices will close the gap with forward prices ('flatten the contango'), making storage uneconomic. This will release stocks to the market, acting as a self-limiting factor on any oil price recovery.
Impacts
By encouraging the return of shuttered production and stored oil, rising prices will trigger a dampening effect.
Excess crude will head to refineries, turning surplus crude into surplus products.
Contango will open opportunities for trading houses to leverage their internal storage capacity.
Keywords:
International,
INT,
OECD,
OPEC,
United States,
economy,
industry,
energy,
finance,
foreign investment,
growth,
hard commodities,
infrastructure,
oil,
investment,
natural resources,
policy,
prices,
private sector,
public sector,
shipping,
transport
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2016
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