Oil traders are increasingly convinced the market will rebalance over the next year with a major drawdown in crude and products stocks. Conviction about market rebalancing is showing in a big rise in the calendar spreads for West Texas Intermediate (WTI) and especially Brent crude in the last two months ( tmsnrt.rs/2fviNVk ). Calendar spreads, which measure price differences between any pair of contracts with different delivery dates, are closely tied to changes in the supply-demand balance. Calendar spreads are conventionally expressed as the price of a near-dated futures contract (such as October 2017) minus the price for a contract maturing later (such as March 2018). When the oil market is oversupplied, and crude stocks are high and rising, calendar spreads tend to be negative, a state known as contango (near-dated contracts trade at a discount). When the market is undersupplied, and stocks are low and […]