Macro Voices MacroVoices #484 Rory Johnston: Crude Oil Forward Curve Conundrum
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Jun 12, 2025 Join Rory Johnston, Founder of Commodity Context and an expert in oil market analysis, as he delves into the baffling changes in the WTI forward curve, shifting from backwardation to contango. Explore the impact of geopolitical tensions on crude oil prices and the intricate dance of supply and demand. Discover how U.S. and China inventory dynamics influence future market trends and gain insights into investor sentiment amidst declining U.S. shale production. It's a fascinating look at today's complex crude oil landscape!
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Unusual Crude Oil Forward Curve
- The crude oil forward curve shows a rare pattern of steep backwardation upfront flipping to contango mid-curve, an unprecedented market signal.
- This likely reflects conflicting market expectations about near-term tightness versus future supply looseness.
Supply vs Physical Reality Disconnect
- Despite forecasts of oversupply, physical crude supply growth is not materializing as expected.
- This disconnect suggests strong regional demand or production constraints, confusing market participants.
China's Inventory Build Mystery
- Chinese crude inventories are building faster than usual despite the contango curve implying drawdowns.
- Chinese buyers may be driving front-end market tightness by accumulating crude as a bargain.