Oversupply, blocking the price rise in oil market – Commerzbank

By FXStreet FXStreet (Delhi) – Research Team at Commerzbank, note that the The ongoing high level of oversupply on the oil market is blocking any increase in oil prices and since they are not profiting from the rising prices in other commodity segments, however, they are showing relative weakness.

Key Quotes

“After the close of trading yesterday evening, the API reported an unexpectedly sharp 9.4 million barrel surge in US crude oil stocks last week. Crude stocks at Cushing also grew by a significant 1.4 million barrels.”

“In view of the very low crack spreads – the 3-2-1 crack spread in the US calculated by Bloomberg is currently at its lowest level in nearly five years – there is less incentive for US refineries to process crude oil. The low margins are the result of a growing oversupply of oil products as rising worldwide refinery capacities have been confronted with subdued demand – for which there are seasonal reasons in the case of gasoline but also economic reasons in the case of middle distillates.”

“Despite these trends, we believe the downside potential for oil prices is limited and expect to see moderately rising prices in the coming weeks and months. After all, there are increasing …read more

Source:: FX Street