Meanwhile, the land stocks of oil have dropped recently, said Edward Meir a senior commodity analyst at MF Global. “Crude stocks (on land) fell by 900,000 barrels last week, more then the 300,000-barrel drop forecast, while petrol stocks dropped by 1.7 million barrels versus an expected unchanged reading. Distillates was the only category that came in slightly on the bearish side, with stocks falling by 300,000 barrels, less than the 700,000 barrels expected,” Meir wrote in his report.
However, the negative “sea impact” on oil markets have a much higher weight than the supportive “land impact” analysts said. High levels of oil inventories on high seas are having a dampening effect on oil’s attempts to rally beyond $80 a barrel, analysts said, adding that it can strengthen the already deepening contango (future prices higher than spot prices). “Oil is continuously trying to cross the sentimental $80 a barrel price level. However, inventories are preventing that from happening,” said a DIFC-based energy analyst. “Barring another sharp sell-off in the dollar that could take its value well below the $1.50 mark against the euro, we do not see crude oil breaking out of its relatively tight trading range anytime soon. As previously noted, US energy demand remains weak, inventories are still high, and most disturbingly, this week’s US macro numbers seem to be pointing to a decelerating rate of recovery,” Meir said. Oil prices have been oscillating between $76 a barrel and $80 a barrel for the past one week. The signs of economic recovery were supposed to enhance oil demand, but that has not happened, EI said.
The oil markets are especially bad in the refined products markets. Refiners in Asia have slashed their crude oil imports from the GCC due to a strong glut in the diesel markets oil traders earlier told Emirates Business. “About 60-80 million barrels of diesel is currently floating in tankers waiting for orders. This has led to a glut. And refiners have been forced to cut their production,” said Nayan Desai, a trader with ConocoPhillips.
