The Great Debate Of Global Oil Supply Continues

Energy futures are treading water this morning, ahead of the weekly inventory reports. The great debate of global oil supply continues, with bulls suggesting that production cuts by OPEC & Russia, whether intentional or not, could push oil to $100 while bears will note that spare production capacity and a global economic slowdown are more likely to push prices to $40.

After a strong rally, there are finally signs that the spring rally for gasoline prices may finally be ending. California retail prices have surpassed $4/gallon in many markets as spot prices approached $2.70 last week, but have since dropped by nearly 30 cents as resupplies begin to arrive. With the RVP transition and a busy refinery maintenance schedule already behind us, and the most speculative bets ever for this time of year on gasoline prices going higher, it’s becoming easier to see why spot gasoline prices may have more room to fall in the coming week. From a technical perspective, if May RBOB can’t hold above $2 this week, it looks like we could see attempt to sell-off closer to $1.80 in the next few weeks.

Some options for reading while we await the inventory reports:

- EIA: It took 11 years for Tiger to win another major the US to break its annual energy consumption record set in 2007.

- Despite falling rig counts in Q1, US shale oil production is still poised to reach new record highs in May, according to the EIA’s drilling productivity report.

- Dallas FED: How online shopping and employment trends have changed inflation patterns.

- The fight for market share: Saudi Aramco is taking a $1.2 billion stake in a Korean refining and shipping conglomerate, giving the Kingdom a guaranteed outlet for more of its oil exports.

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