CRUDE CONFUSION

OPEC+ has been generally increasing oil production to gain share after reducing supply earlier. However, with global GDP growth slowing, there’s concern demand will not materialize, inventories will grow, and higher production will reduce prices. To date however, inventories have not risen, as growth has surprised and China’s been increasing reserves. Thus front-month contracts remain in backwardation, with supply tight, and not contango – when future-dated oil is costlier than spot.