Crude Oil futures are expected to witness a narrowing of Contango in the September-October contract while market fundamentals, geo-political risks, continue to provide a constructure Q3 for the oil markets.
Contango is a situation in futures market when far month contracts are priced higher than near month.

Barclays said in a weekly report that it expects crude prices to average $11/bbl over Q3. Global oil demand is expected to swing higher by 1.4 mn barrels per day quarter-on-quarter on a combination of seasonal patterns and cyclical recoveries.

"Although margins at the front of the curve has improved, mostly on lower crude prices, two-three months out they remain under pressure, given the contango, and product prices will need to pick up to encourage higher runs. Product prices will respond higher once inventories are down down lower," Barclays said.

"We expect strong pick up in Indian demnad, partly as a result of the weak monsoon. Diesel requirements for irrigation facilities, as well as the commercial sector for power as a result of wide-spread pwoer cuts due to low hydro reservoirs."

A pick up in Chinese demand is expected relaying from the recent set of strength in June Industrial Production numbers at 9.2%, and Q2 GDP numbers. Diesel demand has been a laggard so far this year; the first leg of support may come from the manufacturing sector and the second leg to come later on as construction activity improves, on government stimulus.

Improvement in the OECD, with demand in the US and Europe expected to be stronger than last year. Strong refinery runs in the US expected over Q3. Fading weakness in European oil demand growth, with the latest data for France in June showing a 2.6% gain, while Italy’s demand number declined only 4% relative to the -5% average for last year. Overall, as an indication of this positive momentum, new passenger car registrations in the European Union and European Free Trade Association trading block rose for the tenth consecutive month to 1.23 million vehicles in June from 1.18 million in the same month last year, according to data from the Association of European Carmakers (ACEA).
Source: Barclays

Recent improvements in petroleum trade balance mitigate U.S. trade deficit
Since the mid-1970s, the United States has run a deficit in merchandise trade, meaning that payments for imports exceeded receipts for exports. This large and growing deficit on the merchandise trade balance reached a maximum of $883 billion in the second quarter of 2008.

As a result of the recession, dramatic declines of imports in excess of exports during the fourth quarter of 2008 and the first quarter of 2009 reduced the merchandise trade deficit by 49%, to $449 billion in the second quarter of 2009. This trend of declining imports resulted in the lowest quarterly deficit level since early 2002. The merchandise trade deficit then increased to $686 billion in the fourth quarter of 2013, with much of the difference from the 2008 level ($131 billion) attributable to a $158 billion increase in net exports of crude oil and petroleum products.

Crude oil and petroleum products play a significant role in the balance of U.S. trade accounts, and the value of petroleum trade is sensitive to both changes in price and volume. The United States has historically imported more petroleum and petroleum products than it has exported. The deficit reached a maximum of $452 billion in the third quarter of 2008, as a result of a sharp run-up in prices. By the first quarter of 2009 the petroleum trade deficit improved to $174 billion as energy prices and domestic demand fell and U.S. production increased. From the first quarter of 2009 to the second quarter of 2011, the deficit increased to $346 billion, because of continued economic recovery in the United States and higher crude oil prices. Since then, prices have remained high as exports of petroleum products have increased while crude oil imports have declined. As of the fourth quarter of 2013, the deficit was $203 billion.

Trade in petroleum and petroleum products contributes to the overall U.S. goods deficit, but this deficit would exist even if the United States did not import oil. The graph below shows the effects of petroleum imports and exports on the goods trade deficit. Since 2009, exports of petroleum and petroleum products have played a growing role in reducing the overall merchandise trade deficit. While there have been recent increases in crude oil exports, nearly all of the petroleum exports through 2013 were refined petroleum products.
Source: EIA