To: Goose94 who wrote (20252 ) 7/19/2016 3:09:11 PM From: Goose94 Read Replies (1) | Respond to Crude oil: High inventories move to forefront. After rallying to $50 per barrel in June, and then faltering, the markets have recently sent conflicting signals about what to expect in the coming months. Now, after several weeks of new data, the problem of excess inventories for gasoline and diesel are taking center stage as the elephant in the room for any price rally. Elevated levels of refined products are found not just in the U.S., but in Europe and Asia as well – a global problem of too much supply. A glut of refined products is increasing the incidence of tankers being used for floating storage, a sure sign of a near-term glut. New York saw some gasoline tankers backed up because onshore storage was at a premium. Reuters reports that some floating storage is cropping up off the coast of the UK. Oil prices will run into a price ceiling until these inventories are drawn down. Seasonal changes raise concerns. The high levels of refined product stocks come even though we are in the midst of peak demand season. In the U.S., driving peaks in the summer, and in places like Saudi Arabia, crude oil demand hits a seasonal peak in the summer because of higher air conditioning needs. However, peak summer demand is doing very little to whittle down inventories. That raises some concerns as summer starts to come to a close, which could result in a knock to global demand. On top of that, refiners could also begin to slow down production – a move that comes both because of seasonal maintenance and because there is already too much volume on the market. Lower refinery runs will dampen demand for crude oil. In other words, seasonal changes could see lower demand for oil in the coming months.
