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Futures Are Signaling An Oil Market Rebound

Rig

Friday February 17, 2016

In the latest edition of the Numbers Report, we’ll take a look at some of the most interesting figures put out this week in the energy sector. Each week we’ll dig into some data and provide a bit of explanation on what drives the numbers.

Let’s take a look.

1. Currency problems cutting into India’s oil demand

(Click to enlarge)

- A plan to cut down corruption by taking high-valued notes out of circulation is backfiring on the Indian economy. Since most transactions are conducted in cash, the policy is disrupting economic activity.
- India’s oil demand plunged by 4.5 percent in January from a year earlier. Both gasoline and diesel consumption fell sharply.
- The issue is not merely a domestic problem, but it will have an effect on global markets. India imports 80 percent of the oil it needs and India is taking over from China as the world’s largest source of demand growth, a mantle it is expected to hold through 2040.
- Any slowdown in Indian demand could cut into global demand figures.

2. Futures market says supply deficit looming

(Click to enlarge)

- The oil futures market shows signs of ongoing concerns about oversupply, but only until the middle of this year.
- For the near-term, futures are in a state of contango, suggesting a glut will persist for several months. But the contango disappears on futures beyond mid-2017, a reflection…

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