Oil Rises on Tuesday But Glut Fears Persist

Oil rose more than 2 percent on Tuesday after falling by around $4 a barrel in one week, but investors remained concerned about oversupply weighing on prices.

Global fuel inventories are brimming as refineries have churned out huge volumes of diesel, gasoline and jet fuel but the supply glut has diminished refining margins and demand failed to keep up with supply.

Global benchmark Brent crude was trading up 87 cents at $43.01 a barrel at 1354 GMT (0954 ET), after touching a session high of $43.18.

U.S. West Texas Intermediate (WTI) crude was up 67 cents at $40.73 a barrel, having reached a session high of $40.91.

“There is much talk about the product glut replacing the oil glut, and this is a worrisome indicator for crude demand,” said Frank Klumpp, oil analyst at Stuttgart-based Landesbank Baden-Wuerttemberg.

Record inventory levels, additional supply capacity and weaker demand expectations led Natixis analysts to reduce their 2016 oil price estimates on Tuesday.

via Reuters

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, he established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza