Publications: Notes at the Margin

The Oil Market Puzzle (July 8, 2013)


Crude oil markets are in significant backwardation on both sides of the Atlantic. This situation is not unique. Curves have been backwardated over the entire forward market space often in the past. However, this tightness is different in one respect: it has occurred when global crude inventories are high and rising and global oil demand is slowing. Thus, the current price strength seems inconsistent with market fundamentals. This week's report examines this "puzzle" and offers some possible explanations.


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