The oil price had a rough time last week, hitting its lowest level since join after a report by the energy watchdog showed rising inventories which raises concerns over global growth.
In its latest report, which some say is the worst in years, the IEA announced a huge rise of 6.8 million barrels of oil inventories which many see as a key indicator of sediment in the market and may leave investors on the sidelines waiting to see what this week’s report will bring and if there will be any more major surprises.
“The index tells you all you need to know, but the main detail is that total commercial inventories rose a thumping 17.53 million barrels against the five-year average,” wrote Emily Ashford and Paul Horsnell in a Standard Chartered report.
“Crude oil inventories rose 6.81mb in absolute terms and 9.66mb against the five-year average, with the increase in refinery runs to a record-high of 17.98 million barrels being the only bullish component of the whole crude balance equation. Cushing crude inventories rose for the first time in three months. Implied demand was lower week on week for every product except gasoline.” They added.
Disappointing data out of China last week also weighed on the oil price with fears that the worlds 2nd largest economy may reduce its demand for oil. Turkey may also be in the same boat as the plunge in their currency, the Turkish Lira has pushed oil prices in dollar terms 40 percent higher.
Some analysts say that the upcoming sanctions due to be introduced against Iran are going to create extreme volatility in the oil markets and some traders have already begun to take positions to take advantage of the big movements.
With new sanctions coming into play and also the IMO 2020, we see there is more volatility and therefore more opportunities to trade. So, we see our customers taking, slowly but surely, positions for that to happen,"said Eelco Hoekstra, CEO of Vopak.