LONDON - Every day, traders in London congregate at 4pm to buy and sell North Sea oil for half an hour.
Next, the global epidemic and destructive Saudi-Russia price war pushed the market to the brink of disaster. The collapse brought the rivals back together for the biggest production cut on record, just as the pandemic ebbed. It flipped last week into so-called backwardation, with crude for immediate delivery trading at a premium to forward contracts. That shape is a telling sign that refiners that saw demand for their products disappear during the lockdown, are now willing to pay top dollar to secure supplies for their facilities.
The scale of the rebound is still hotly debated, but most say consumption is now 10 per cent to 15 per cent below normal levels. The continuing influence of the virus on daily life is visible in the uneven nature of the oil recovery. The scarcity created by the Organisation of the Petroleum Exporting Countries and its allies has pushed prices to unusually high levels even in Europe, a continent only tentatively emerging from lockdown.
If OPEC+ manages to make every country stick to its output quotas and demand keeps rising, the world could soon start consuming more oil than it produces.