Uncertainty looms for the energy market

Traders believe the market may balance by the end of 2016, but until then the future is uncertain

Is the worst over? Market sentiment may be shifting, even before the fundamentals really have their say. For the past two years, the prevailing wind has been bearish. Demand growth has been weak, thanks to economic problems in Europe and the transition from an investment-led to consumer-led economy in China. The supply side has reinforced this picture of market weakness. The phenomenal growth of light tight oil production in the US, rising oil sands output from Canada and, since autumn 2014, Saudi Arabia’s reluctance to withhold supply have all pushed oil lower.  Now the perception is starting to change. The futures curve no longer shows the steep contango that was seen earlier this year, su