• 4 minutes Pompeo: Aramco Attacks Are An "Act Of War" By Iran
  • 7 minutes Who Really Benefits From The "Iran Attacked Saudi Arabia" Narrative?
  • 11 minutes Trump Will Win In 2020
  • 15 minutes Experts review Saudi damage photos. Say Said is need to do a lot of explaining.
  • 4 hours Let's shut down dissent like The Conversation in Australia
  • 5 mins Ethanol is the SAVIOR of the Oil Industry, Convenience Store Industry, Automotive Supply Chain Industry and Much More!
  • 8 hours One of the fire satellite pictures showed what look like the fire hit outside the main oil complex. Like it hit storage or pipeline facility. Not big deal.
  • 5 hours Saudi State-of-Art Defense System looking the wrong way. MBS must fire Defense Minister. Oh, MBS is Defense Minister. Forget about it.
  • 3 hours Ethanol, the Perfect Home Remedy for A Saudi Oil Fever
  • 7 hours Trump Accidentally Discusses Technology Used In The Border Wall
  • 15 hours Donald Trump Proposes Harnessing Liberal Tears To Provide Clean Energy
  • 22 hours Drone attacks cause fire at two Saudi Aramco facilities, blaze now under control
  • 14 hours Saudis Buying Oil From Iraq
  • 14 hours Saudis Confirm a Cruise Missile from Iranian Origin
  • 5 hours Hong Kong protesters appeal to Trump for support.
  • 1 day China Faces Economic Collapse
  • 1 day Democrats and Gun Views
Alt Text

Oil Jumps 4% On Positive Chinese Economic Data

Oil prices surged on Wednesday…

Alt Text

Oil Prices Close 15% Higher On Record Trading Day

Oil prices spiked on Monday,…

Alt Text

Oil Price Explosion – Brent Crude Jumps 20%

Brent crude rocketed on Sunday…

Tsvetana Paraskova

Tsvetana Paraskova

Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. 

More Info

Premium Content

Oil Market Is Set To Become Very Tight Later This Year

Brent Crude futures prices for later this year suggest that the oil market is undersupplied, despite recent rises in U.S. crude oil inventories that sent spot oil prices plunging in the past two days, Reuters market analyst John Kemp argues.

Although U.S. commercial crude oil inventories have been rising in recent weeks, they have been doing so less than normal for this time of the year although U.S. refineries have been undergoing heavy spring maintenance to be ready to process fuel in the fall and winter of 2019, just ahead of the new low-sulfur requirements for shipping fuels, Kemp writes.

Oil prices plunged on Thursday to the lowest in a month after U.S. government data showed on Wednesday that inventories hit their highest since September 2017 and production soared to another record level last week.

Analysts and the market interpreted the increase in inventories and the record-high U.S. crude oil production as suggesting that the market may be well-supplied.

However, the Brent Crude futures prices are now in a steep backwardation—the market situation in which front-month prices are trading at a premium compared to prices further out in the future—a sign of a tighter and undersupplied market.

Futures prices between July and December are trading at a backwardation of more than $2.70 per barrel—a sign that traders expect the market to be very tight in the second half of 2019, according to Kemp. Related: Saudi Arabia, UAE “Draw The Death And Collapse Of OPEC”

When the U.S. refinery maintenance ends and refineries begin full production ahead of the summer driving season, crude oil inventories are likely to decline quickly, leading to a tighter market, Kemp says. That is, unless oil demand deteriorates going forward or Saudi Arabia ramps up production significantly.

The July/August Brent time spread continues to strengthen, while the flat price weakened on Thursday, Warren Patterson, Head of Commodities Strategy at ING, said on Friday.

“The Jul/Aug spread continues to move into deeper backwardation, with the spread trading as high as US$0.78/bbl this morning, up from US$0.61/bbl on Tuesday. This spread strength does suggest that the spot physical market continues to tighten,” Patterson noted.

By Tsvetana Paraskova for Oilprice.com

More Top Reads From Oilprice.com:




Download The Free Oilprice App Today

Back to homepage



Leave a comment
  • hari donz on May 03 2019 said:
    what does it mean when they say" When the U.S. refinery maintenance ends and refineries begin full production ahead of the summer driving season, crude oil inventories are likely to decline quickly, leading to a tighter market, Kemp says" , crude oil inventories are likely to decline quickly but how & why??

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News
Download on the App Store Get it on Google Play