Oil Market Developments

March 2017

Giovanni Serio

1 Oil Market Developments March 2017 1

The large expansion in supply has led to a sharp surplus

2 Oil Market Developments March 2017

As a result global commercial oil stocks have surged

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Forcing a rebalancing via non-OPEC production cuts

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Storage capacity has increased significantly

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China implied stock builds have set new highs

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However, the relationship between commercial inventories and Brent structure has

remained strong

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Other stocks, such has China, government stocks and Floating Storage have a weaker

correlation with time spreads

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Since 2014, the market has been characterized by a pronounced “forward looking

behaviour”

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Curvature in December hit near historical lows

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Deferred spreads strengthening was behind this

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In most prior examples curvature moves are driven by the prompt

spreads

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