Relatively little attention is currently paid to the oil market. Many might not even realize that oil prices are getting very close to a bear market, with US crude trading below $42 this morning. As oil nears that level, this article offers five things to watch. Firstly, keep abreast of supply and demand figures, as things appear to be balancing out. Secondly, pay attention to the gasoline glut, as it is threatening to strongly slow refinery purchases of oil (they are the only ones that actually buy crude). Thirdly, keep an eye on floating storage figures. Fourthly, watch rig count, particularly in the US, as the number has been drifting up, which is a bad sign for prices. Finally, keep a close eye on hedge fund positioning in the market, as the huge long position the sector had has started to be unwound and now many are betting the opposite direction.
OxWFD: We think oil will likely fall a bit further before more supply again gets taken out of the market. Also it is going to take a bit of time to work out the gasoline glut, so things don’t look likely to rise in the near term.
Source: Financial Times