Oil Market Metrics Signal Sufficient Supply And Weakening Demand | ZeroHedge
By Irina Slav of OilPrice.com Oil futures and swaps globally are increasingly showing signs of easing supply concerns and resurfaced concerns about further weakness in crude oil demand. The prompt spreads in the U.S. benchmark, WTI Crude, are already in contango, signaling enough near-term supply. Brent Crude front-month to second-month futures prices also dipped into contango earlier this week. Contango is the state of the market in which prices for delivery at later dates are higher than prompt prices—a market situation signaling oversupply and one which traders use to store oil for delivery at a later date. The opposite market situation—backwardation—typically occurs at times of market deficit and in it, prices for front-month contracts are higher than the ones further out in time. Another oil market metric closely followed for signs of demand in the key oil-importing region, Asia, is the premium of Oman futures over Dubai swaps. That premium dropped on Thursday to below $1 per barr
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### Response: By Irina Slav of OilPrice.com Oil futures and swaps globally are increasingly showing signs of easing supply concerns and resurfaced concerns about further weakness in crude oil demand. The prompt spreads in the U.S. benchmark, WTI Crude, are already in contango, signaling enough near-term supply. Brent Crude front-month to second-month futures prices also dipped into contango earlier this week. Contango is the state of the market in which prices for delivery at later dates are higher than prompt prices—a market situation signaling oversupply and one which traders use to store oil for delivery at a later date. The opposite market situation—backwardation—typically occurs at times of market deficit and in it, prices for front-month contracts are higher than the ones further out in time. Another oil market metric closely followed for signs of demand in the key oil-importing region, Asia, is the premium of Oman futures over Dubai swaps. That premium dropped on Thursday to below $1 per barr