This morning the Energy Information Administration released inventory levels for crude oil. The forecast was for an increase of 3.25 million barrels, but the number came in at 10.3 million barrels. The chart below tells the story to a certain extent of the supply and demand imbalance.
Source: Bloomberg, EIA
There remain headwinds for oil. The recent Iran deal will allow Iran back into the global oil supply story. This could prove to be meaningful to the supply side over the coming months. One author this morning noted that it may mean a $5 to $15 price adjustment from current levels. Now this is just one person’s guess, but he is not alone in his comments. For some time now there have been a lot of talk suggesting that we will see a $30 print on the price of oil. If the perfect storm arises or continues they may get their wish.