Oil traders may need neck braces to follow the contradictory price signals and opinion-setters’ spin whirling about global petroleum markets, as headlines variously celebrated firming prices and worried over an ongoing over-supply of crude oil.
Prices for benchmark North Sea and West Texas crudes teased, but didn’t break through the $50-a-barrel mark early this week, Reuters reports, after influential investment bank Goldman Sachs opined that global oil demand, long in surplus, had begun to exceed supply during the first two weeks of May. “The oil market has gone from nearing storage saturation to being in deficit much earlier than we expected,” the investment group observed.
The depth of any crude supply deficit was in doubt, however, as flows from Libya, Nigeria, and Venezuela were expected to rise following disruptions. The Organization of Petroleum Exporting Countries (OPEC), meanwhile, advised the industry in a release that “fundamentally, oversupply still persists. Oil output remains high.”
And after six years of capacity expansions, Downstream Today reported signs that U.S. refiners are “gearing up for leaner times, and the belt-tightening could sap demand for crude and potentially derail [the] recent recovery in prices.”