Oil oversupply meets rising demand in quietest market since 2013

Oil supply

Oil supply

04 July 2015, News Wires – The sleepiest oil market since 2013 will probably limp through the second half of the year as well.

Crude traded in a $5 range in June, the narrowest in 19 months. Volume was the lowest since December and open interest – – the number of futures contracts outstanding — was the least since January. New York-traded futures, which have swirled around $60 a barrel for the past two months, will average about $59 in third quarter and $63 in the fourth, according to forecasts of 22 analysts compiled by Bloomberg.

Neither the potential return of Iranian crude to the market nor the long-anticipated decline in U.S. production is stirring a reaction. While gasoline demand has increased faster than projected, keeping the oil glut from growing, record production from OPEC’s biggest members and potential for a quick increase in U.S. shale output have capped a rebound in prices from the biggest drop since 2008.

“The market has found its equilibrium point and I don’t see any reason for us to break out of the range,” Michael Hiley, head of over-the-counter energy trading at New York-based LPS Partners Inc.,a futures brokerage, said by phone Wednesday. “It’s a tug of war between gasoline demand and crude supplies.”

The current conditions contrast with what the market saw a year ago. West Texas Intermediate crude fell almost 60 percent from $107.26 in June 2014 to $43.46 in March before rebounding about 40 percent into the current trading range. The U.S. benchmark grade lost 21 cents to $56.72 a barrel in electronic trading on the New York Mercantile Exchange at 11:49 a.m. Singapore time Friday.

– Bloomberg

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