OIL & ENERGY INSIDER
Friday, December 17th, 2021 Oversupply has been one of the main talking points in oil markets in recent months, and now it seems that it will soon be upon us. The softening of Asian oil demand, triggered by China’s zero-COVID measures and Beijing’s continued clampdown on independent refiners in Shandong, has curbed the enthusiasm of market bulls while Brent is now flirting with contango, a sign of looming oversupply. This being said, there remain some upside factors, primarily the low level of inventories globally - which are now roughly at March 2020 levels. With Omicron cases doubling daily in European countries, however, it seems supply is going to shoot past demand. Against this background, ICE Brent slid to $73 per barrel, whilst US benchmark WTI was trading at around $70.5 per barrel. Get Ready for Some Chinese Buying. With China seeing its electricity mandates eased, coupled with the recent strengthening of the Dubai complex, opened up crude arbitrage from Europe, Africa, an