Winter is coming for oil – and not in a positive way

THE oil market is deceptively calm. Below the apparent tranquility lies an underappreciated transformation that has slowly reshaped the market over the last 25 years – because the arrival of China and India as big consumers has not just given an enormous boost to demand, it has also altered the market’s seasonality. And that matters a lot this year.

Until recently, global oil demand peaked every year with the arrival of the Northern Hemisphere’s winter.

As temperatures dropped from October, heating oil and kerosene consumption spiked from the US to Germany to Japan. Hence, as recently as 2014, the fourth quarter still marked the annual high for crude demand and, typically, prices. Since then, the seasonality has flipped: Now, the third quarter sees higher demand and prices.