Oil market faces risk of big shock as high rates to hit inventories

The oil market is vulnerable to a shock as high interest rates cause global inventories to thin out, top analyst Amrita Sen warned inSuch destocking is keeping oil prices low for now, but she predicted commercial supplies eventually will drop to their lowest level in over a decade, leaving little cushion for any market surprises.

"For oil refineries and trading companies, the cost of holding oil in tanks has become much more expensive," Sen wrote."And increased financing costs also mean that the penalty for being caught with unsold product is higher than before." In 2000 for instance, the US was similarly raising rates amid falling oil output from OPEC. As a result, oil supply in developed regions dropped by 6%.

Meanwhile, traders are further disincentivized from keeping oil in storage by today's backwardation, a situation in which oil prices trade at a higher rate short term than in the longer term. In Asia, Sen noted some refiners are worried destocking has gone too far and are looking to rebuild inventories with Saudi crude, despite recent price hikes.

France Dernières Nouvelles, France Actualités

Similar News:Vous pouvez également lire des articles d'actualité similaires à celui-ci que nous avons collectés auprès d'autres sources d'information.

Stocks drift as investors balance peak rate hopes with oil price riseGlobal stocks held steady on Tuesday, as investors balanced the inflationary force of rising oil prices with hopes that central banks would not over-tighten monetary policy into a potential recession.
La source: Reuters - 🏆 2. / 97 Lire la suite »

Denver court OKs oil company’s motion in dispute with Colorado regulatorsThe ongoing saga of an oil and gas company accused of multiple violations and in danger of losing its right to operate in Colorado has taken a new turn with a court ruling that puts on hold an orde…
La source: denverpost - 🏆 13. / 72 Lire la suite »