Oil Prices and the Oil Market

Oil prices now ignoring fundamentals 'entirely' warn Barclays Capital

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Category: Oil | Brent and WTI Crude

Published on Thursday, 20 October 2011 13:23

Written by Will Peters

The US oil inventory surplus (excluding the estimated ‘other oils’ category) is now completely gone at -1.1 mb.

Oil prices continue to trace macroeconomic sentiment and ignore fundamentals entirely.

Oil prices declined yesterday on the back of poor risk sentiment, that said losses were certainly less exaggerated when compared to similar market pullbacks witnessed in September.



The key reason could rest with traders realising that the fundamentals in the oil market can simply no longer be ignored.

As a research note from Barclays Capital states today:

"Oil prices continue to trace macroeconomic sentiment and ignore fundamentals entirely."

Latest DOE data shows a continuation of the global trend of rapidly thinning inventory cover.

The US oil inventory surplus (excluding the estimated ‘other oils’ category) is now completely gone at -1.1 mb, having taken another plunge lower in the latest data, and has now moved below the five-year average for the first time since November 2008.

Though slow to start, the process of attrition is now in full swing in the US too, with the overall surplus of total commercial inventories to the five-year average peaking at 112 mb in September last year, and 13 months on, having drawn at the rate of almost 0.3 mb/d, inventories have wiped out any excess at the margin.