BAKU, Azerbaijan, May 7
By Leman Zeynalova – Trend:
A slow oil market recovery will come from June as demand will indeed see a boost and most of the now unused produced oil will find more eager buyers, Trend reports citing Rystad Energy.
“But June is a few weeks away still and till then prices have to drop further in May before the recovery,” reads the report from the company.
Rystad Energy believes that some light price swings will not be unusual during the month though.
“Traders will be bullish in news of new shut-ins, although these are to be expected, and prices will be gaining on every new announcement of production curtailments. And they will be falling on every new announcement of strong stock builds,” reads the report.
Comparing to the price fluctuations over the last month, oil losing or gaining less than a dollar’s worth is the new ‘stable’, said Rystad Energy.
“For a second day in a raw oil stopped its gaining spree. It is not that we are anywhere different to Monday and Tuesday. The fundamentals are the same. The gains oil has seen were just the market’s enthusiasm for entering May, or ‘the month of the OPEC cuts’. But, as was expected, the reality of this month’s oversupply started to sink in. Rystad Energy has forecasted a surplus of around 13 million bpd for the month of May which, although stands at half the surplus of April, is significant.”
Some oil oversupply will also last well into June before shrinking to more manageable levels, reads the report.
“Crude inventories have continued to build for another week and this will not stop for a while. Until of course the available storage capacity is exhausted.”
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