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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

3 Oil Market Developments March 2017 3

Forcing a rebalancing via non-OPEC production cuts

4 Oil Market Developments March 2017 4

Storage capacity has increased significantly

5 Oil Market Developments March 2017 5

China implied stock builds have set new highs

6 Oil Market Developments March 2017 6

However, the relationship between commercial inventories and Brent structure has

remained strong

7 Oil Market Developments March 2017 7

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

correlation with time spreads

8 Oil Market Developments March 2017 8

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

behaviour”

9 Oil Market Developments March 2017 9

Curvature in December hit near historical lows

10 Oil Market Developments March 2017 10

Deferred spreads strengthening was behind this

11 Oil Market Developments March 2017 11

In most prior examples curvature moves are driven by the prompt

spreads

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15 Oil Market Developments March 2017 15