In its latest monthly report, out Tuesday, the International Energy Agency mentioned that some oil at European and Asian trading hubs was now being stored on vessels, despite prices not really justifying the cost. The implication is that regular storage tanks are getting a tad full.
With oil prices having traded in a band between roughly $40 to $50 a barrel for about three months, some prominent voices say that the bottom is in. Granted, that “some” includes OPEC ministers, for whom predicting a rebound in prices is a little like Ronald McDonald forecasting a bull market in hamburgers. Still, with global oil demand projected to be up by a hefty 1.8 million barrels a day this year, and with low prices clearly starting to eat away at the U.S. shale boom, the foundations of a recovery are coalescing.
The IEA’s comments on storage constraints, though, should serve to remind investors that this isn’t 2009 all over again. Back then, in the aftermath of the financial crisis, when oil last paddled in the shallow waters of $40 or less, it surged back above $80 in less than a year and hit triple digits again by early 2011.
Brazil Energy Insight 
Leave a comment