Oil Traders Warn There's a Supply Crunch Looming quoting : "Bloomberg"

James Foster, global commodities head at BP Oil International, however, said a looming supply crunch was not a certainty. Hedging activity by these same producers is keeping future prices low until 2020, which is dissuading investment in major oil projects, he said. The oil market is risking a supply crunch as producers cut spending on major projects to focus on short-term low-cost shale output in the U.S., some of the top crude and products traders said. "You can count them on one hand," Muller said of the major long-lead oil project investment decisions made in 2016. Mike Muller, vice-president of crude oil trading and supply at Shell International Trading and Shipping, said with current and future prices depressed, spending decisions on major projects have been delayed.


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Traders in the energy market are too focused of late on crude oil inventories. While U.S. oil inventories are at record highs, oil cannot fuel the summer driving season. Technicals have also recently improved for WTI crude oil prices, with trading patterns such as stochastic, volume, and relative strength indicators showing bullish confirmations. This should drive up demand for oil, sending oil inventories lower and prices higher. While the crack spread is leading the price of crude oil higher as refinery demand picks up, market fundamentals are also supportive of oil prices.


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collected by :Jack Luxor