China's Oil Demand Remains Elusive For Now

February physical oil trading is starting out with a fizzle. Note that we wrote 2-weeks ago about the importance of early February trading. We said that early February would give us a good glimpse of early Q2 oil market balances and that in order for us to be right about Q2 being much tighter than Q1, we would need to see backwardation strengthen.

Well, as of this writing, you can see that while the Brent prompt 1-2 timespread is in backwardation, we do not see any signs of strength anywhere. Couple that with physical oil traders noting softness persisting from March and the right conclusion to take away from this is that China has not returned just yet.