U.S. gasoline inventories have fallen further below their five-year average, while U.S. oil demand remains strong. Our estimates of current market balances indicate a significant tightening relative to a year ago.
Prices should continue to consolidate in the wide range of $535-$555 in the near term, though the underlying sentiment remains bullish and downside appears limited at present.
There remains room for further upside this year, with fund interest continuing to be justified on...inflationary concerns, fears of economic slowdown, hopes of large Asian central bank buying.
The faltering uptrend...warns of choppy times ahead. However, we do not think we have seen the peak for oil and while prices remains supported above $56.50 we are targeting $75 later in the year.