China oil demand has increased by 7.4% in the last year and it is now the second largest oil importer in the world. Saudi oil is moving east even though production is down to 9.2 million barrels a day which is the lowest in a year and less than the peak of 10.2 mb/d. There is a good reason for relatively tight oil markets with Brent prices up almost $8/ barrel this year.
Open interest is at all time highs for WTI with over 1,665,000. Some academic work suggests that increasing open interest in futures is a good predictor of higher commodity returns. The open interest indicates the need for higher returns necessary to hold the futures.
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