Oil investors are finally buying into the notion that the biggest risk to the price now is likely to be supply falling short of demand, rather than from any stubborn overhang of unwanted crude, the options market shows.

The price of Brent crude has hit $52 a barrel, virtually double January’s near-13-year lows, driven primarily by a decline in global production that has been speedy enough to bring supply and demand into line faster than many had anticipated.

“In the end, you will see global oversupply, at some point diminish, and in effect even earlier than speculators realise,” ABN Amro chief energy strategist Hans van Cleef said.

In the last year, nearly a million barrels per day (bpd) have vanished from higher-cost US output, one of the key contributors to the surplus that built up since the Organisation of the Petroleum Exporting Countries voted in late 2014 to sacrifice price strength for market share.

Coupled with that, unplanned outages, from wildfires in Canada to violence in Nigeria and political or economic unrest in Venezuela and Libya, have reached their highest in five years, taking as much as four million bpd offline last month.

For the last two years, volatility, a measure of the cost of owning a particular option, has been at its highest on deeply unprofitable, very near-term put options, or those that give their owner the right, but not the obligation, to sell oil at a given price by a set date.

To an extent, that bias reflected the fear among investors of a sudden, and potentially profound, downside shock for the oil market.

The skew has now shifted to unprofitable, or out-of-the-money, put options maturing almost a year out, for the first time since 2014.

This switch would suggest investors are a lot more confident about the prospect of a more sustained rally in the oil price and much of the concern over the extent of the overhang of unwanted crude held in storage tanks, or even on ships, appears to have evaporated.

Volatility on out-of-the-money puts maturing next April at a strike price of around $35.35 a barrel is around 45 per cent, compared with around 35 per cent for out-of-the-money puts maturing in one week’s time with a strike price of $49.42.

Highlighting this growing faith in oil’s prospects for this year, is the shrinking of the premium, or contango, of Brent futures contracts for delivery of crude further ahead over those for prompt delivery.

The contango between the front-month Brent futures contract and December 2017 futures has fallen below $3.00 a barrel, less than half of what it was just three months ago.