Crude Oil

August 5, 2019

The Research Team reviews the Crude Oil market


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5 August 2019 

  • Our proprietary short-term systematic fundamental model is finally picking up some supply tightness in the market. As discussed on the previous page there are still plenty of signs to suggest that we are in a period of looser global oil supply so the tightness may be short-lived. We need more data to assess the longevity of the impact so the next week will be crucial. Further supporting evidence for the apparent tightness in the short-term is the utilization of inventory capacity which is contracting. This means that there is less crude flowing into storage.
  • Our short-term demand assessment has improved since our last publication. The positive change can be explained by the notable improvement in the profitability of refineries. The result is below average amount of idle capacity which should support demand in the short-term. Our forward demand view remains downbeat as we expect an imminent slowdown on the back of weak economic data and seasonal cyclicality.
  • Our short-term macroeconomic view is bullish. Signals from the FX markets are finally starting to support prices. The latest reading of our proprietary FX Impact Model is displayed. It points to potential gains for the oil market in August. It is also worth mentioning that the speculative net long positions on the crude oil financial market have increased, albeit from a low base. This is a short-term development which is 3 weeks old, but it comes to confirm the overall bullish view discussed above.



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