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Brent futures for the end of the year suggest the oil market is underfunded, despite recent increases in crude oil inventories in the United States that have pushed spot oil prices down in the United States. the last two days, according to John Kemp, market analyst at Reuters.
Although commercial crude oil inventories in the United States have increased in recent weeks, they have been at a lower than normal level for this time of year, although US refineries are doing so well. the focus of intensive maintenance work in the spring to be able to treat fuel in the fall and winter 2019, Kemp writes that it is just before the new low sulfur requirements for fuels intended for shipping.
Oil prices plunged Thursday to a lows last month after US government data showed on Wednesday that stocks had reached their highest level since September 2017 and that production reached a new record high last week.
Analysts and the market have interpreted the rise in inventories and record production of US crude oil as suggesting that the market could be well stocked.
However, Brent crude futures prices are now experiencing a significant backlog – the market situation in which the first month's prices exchange at a higher price relative to future prices, sign of a larger market. tense and under-stocked.
The futures prices between July and December are trading at a backward of over $ 2.70 a barrel – a sign that traders expect the market to be very tight in the second half of 2019, according to Kemp. Related: Saudi Arabia, UAE "Draws death and the collapse of OPEC"
When US refinery maintenance is completed and refineries begin producing at full capacity before the summer driving season, crude oil inventories are expected to decline rapidly, resulting in a tighter market, Kemp said. In other words, unless the demand for oil deteriorates in the future or Saudi Arabia increases its production significantly.
The July / August Brent time spread continues to strengthen, while the lump sum price weakened on Thursday, said Warren Patterson, head of product strategy at ING.
"The gap in July / August continues to widen in the background, trading up to 0.78 USD / bbl this morning, up 0.61 USD / bbl on Tuesday. This spread suggests that the spot physical market continues to tighten, "said Patterson.
By Tsvetana Paraskova for Oilprice.com
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