News

June 26, 2009

The Sell Off Which Saw Oil Prices Drop Last Week Has Proved Short Lived But There is Still Concern Over the Large Overhang of Inventories

By Eithne Treanor

The early sell off we saw this week was short-lived and oil re-gained strength by Friday. Attacks in Nigeria disrupted supply and the talk in the market is now questioning if those “green shoots” of recovery were actually weeds. Everyone is looking for good news but treading carefully as volatility could quickly return to the market. The oil price was back above US$70 in early trading on Friday.

Huge inventories continue to be the reality check for the oil market. There’s still more than 60 days of forward cover and excess supply.  The Centre for Global Energy is calling on OPEC to increase supply to help alleviate the price and while commending them for rebalancing supply and demand their monthly report calls on OPEC to do more. “OPEC’s members have the capacity to moderate the rise in oil prices, but they are choosing not to do so.”  Analysts at the CGES appear to be...