Saudi Arabia Reaps The Benefits Of Steepening Backwardation

Oil prices globally have been firmly above $80 per barrel, however, the market at large has kept surprisingly mum about the key factor in the price rally of July-August, namely Saudi Arabia’s voluntary production cuts. Happening at a time of strong demand and low inventories, the output curbs sent backwardation spiraling again so that the Dubai cash-to-futures spread is back to $2 per barrel, all the while providing constant support for refining margins around the world. Were it not for Riyadh, the pressure on refiners would have been…