Imagine my surprise this morning when the market opened just a bit lower on the price of oil …
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Oil fell around 3 percent on Monday after Iran dashed hopes of a coordinated production freeze any time soon, returning bearish sentiment over a supply glut that has sent prices crashing.
Okay, raise your hand if you thought (seriously thought) oil was headed more than marginally higher last week? If your hand is up, my question to you is: why?
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Cushing, OK Crude Oil Ending Stocks is at a current level of 66.95M, up from 66.26M last week and up from 49.22M one year ago. This is a change of 1.04% from last week and 36.02% from one year ago.
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Global oil inventories are forecast to increase by an annual average of 1.6 million b/d in 2016 and by an additional 0.6 million b/d in 2017. These inventory builds are larger than previously expected, delaying the rebalancing of the oil market.
The reality of the oil market is such that oil cannot go much higher, at least and until the glut is drained. In fact, it might well be headed lower, back to the mid $20 zone, and, in fact, it might just stay there for, well, who knows, a long time, despite what the “expert” oil analysts are telling you. Don’t buy what they are peddling.
