Oil traders have shifted to hold a more bearish outlook on crude prices this year and into 2016, with data showing the number of sell options taken out at $40, $35, $30 and even $25 a barrel has jumped in the past four weeks.
“The shock absorber provided by oil stocks is no longer restricted to just crude”.
High stocks could protect the market from a supply crunch should there be a lengthy spell of cold temperatures.
“A year end recovery in commodity prices remains unlikely with a stronger US$ and EM (emerging market) growth concerns”, ANZ bank said, referring to a surge of the greenback versus most other currencies on the expectation that the U.S. Federal Reserve will raise interest rates soon.
The price comparison website said then that the cheapest average standard tariff among the major suppliers on the market was now £1,075 – which is around £135 down on early 2014.
USA crude imports rose last week by 434,000 barrels per day.
Petrol and diesel prices in the United Kingdom have failed to match the price decline over that period – with unleaded standing at an average 130p per litre in May 2014 at a time when oil cost $111 per barrel.
“Record-high output in Russian Federation provides a partial offset”.
Prices will remain low in the near term, the worldwide Energy Agency said Tuesday, but OPEC will eventually curb output, allowing oil to rise bac near $80 by 2020.
As a result of market share battles, the oil glut in Europe is aggravating further. Iraq has overtaken Saudi Arabia as the second-largest seller and Iran has already lined up buyers for its oil for when sanctions are lifted.
“For this reason, producers are likely to grow still more competitive on pricing”, the IEA said. “Sour crude markets appear especially oversupplied with discounts versus sweet grades widening”.