Traders and refiners buying and selling actual barrels say it's starting to look somewhat more bullish.
In Asia and the Middle East, Basrah Heavy, a low-quality grade from southern Iraq, is priced at $4.45 a barrel under the benchmark Dubai, the strongest pricing since the country started exporting it in June 2015.
In the world of sweet crude, differentials for certain oil grades have also improved, despite competition from rising American shale output.
In the U.S., Light Louisiana Sweet traded at a premium of $2.55 a barrel above WTI, the strongest since March 2016, as it benefits from outages in Canada. A year ago, that grade traded at a premium of just $1.30 a barrel. Alaska North Slope crude is trading at a $2.45 premium over WTI, its strongest differential in nearly two years. Thunder Horse, pumped out of the Gulf of Mexico, jumped earlier this month to a premium of $1 a barrel over WTI, the most in 15 months.
“Recent days have seen various physical crude assessments in the U.S. exhibit increased strength versus WTI," consultant JBC Energy GmbH said in a note to clients.
In the Mediterranean, buyers are showing they’re willing to pay 40 cents below Brent for Kazakh CPC crude, the narrowest discount since November.
The physical market will face a test after the summer. By October, crude refinery intake will drop to about 79.9 million barrels a day as plants undergo seasonal maintenance. That’s 1.5 million barrels a day below the peak in August, equivalent to the production of OPEC members Libya and Ecuador combined.
If crude differentials remain strong by then, it would be a sign that OPEC has succeeded in re-balancing the market.