Prices 'may fall' this summer

22/06/2009

Crude prices may weaken in the coming months due to a supply overload brought about by Saudi Arabia, an analyst at Bernstein Research predicts.

In a note to clients, Neil McMahon explained that prices for crude and distillates such as heating oil and DERV have been supported by China's decision to begin stockpiling petroleum products.

However, citing the investor's report, This is London notes that satellite imagery suggests that this stockpiling has now come to an end in recent weeks.

Meanwhile, further satellite image analysis reveals that Saudi Arabia, the world's largest crude producer, has increased production and is loading up more tankers with oil, anticipating further demand increases.

"Some of the drivers for the recent oil price rally appear to have played out for the time being and may even start to reverse which should result in a retrenchment in the very near term," Mr McMahon told clients.

Last year, unprecedented demand for crude helped to push oil to an all-time high of $147 a barrel.