Global Oil Market Update August 2009

Oil market fundamentals remain unattractive. Demand refuses to recover. The US driving season was a non-starter, with gasoline consumption much lower than had been hoped. Industrial activity may now be picking up in parts of Europe but overall middle distillate trends are depressing. Misery loves company, so inventories have continued to rise and non-OPEC production has surprised on the upside. OPEC volumes may have slipped somewhat, but this is merely a reflection of Nigeria's continuing problems. All in all, the supply/demand balance points to price weakness for some time to come. Fundamentally, it is far too early to be positive.

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