Oil traders eye signs of the end of supply glut

Oil investors are finally buying into the notion that the biggest risk to the price now is supply falling short of demand, rather than from any stubborn overhang of unwanted crude, the options market shows.

The price of Brent crude has hit $52 a barrel, virtually double January’s near-13-year lows, driven primarily by a decline in global production that has been speedy enough to bring supply and demand into line faster than many had anticipated.

“In the end, you will see global over-supply, at some point diminish, and in effect even earlier than speculators realise,” ABN Amro chief energy strategist Hans van Cleef said.