Oil Lower as Supply Storage Sites Near Full Capacity

Oil edged lower on Monday on a global supply glut pushing fuel storage sites close to capacity, and with fewer speculators betting on a rise in crude prices.

Brent, the international benchmark, was down 30 cents at $47.69 a barrel at 1253 GMT (0853 ET), more than 11 percent below this month’s high.

U.S. crude futures traded down 25 cents at $44.35 a barrel.

As refined oil product storage tanks fill up, unwanted diesel and jet fuel (distillate) cargoes are backing up outside Europe’s ports and taking longer, slower routes around the southern tip of Africa to buy time.

Research consultancy Energy Aspects said product stocks rose by 0.6 million barrels per day in the third quarter.

“While our distillate balances suggest that stocks will fall short of capacity, the margins of error are small and the risks high, leaving risks to current crude oil prices and timespreads as skewed to the downside through next spring,” analysts at Goldman Sachs wrote on Monday.

The bearish outlook led more speculators to sell out of long positions on crude oil, with holdings slipping by 18,597 contracts last week to 184,939 lots, InterContinental Exchange data showed.

Due to low oil prices, investment in the sector in 2016 is likely to decline further after sliding this year by more than a fifth, Fatih Birol, executive director of the International Energy Agency (IEA), said on Monday.

via Reuters

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.

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, Alfonso Esparza 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 has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. 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