Global Oil Market Update September 2009

An 8% fall in crude prices between the end of August and the first week of September gave the fleeting impression that the parlous state of oil market fundamentals had triggered a major correction. Indeed, the subsequent rally soon ran out of steam and left prices some US$6 per barrel (bbl) below the August peak. It is unlikely, however, that the recent downtrend will continue at the same rate. Oil is being treated as a proxy for economic activity and stock market wellbeing. The return of greater volatility can be explained, in part, by the conflict between an over-supplied oil market and broader macroeconomic optimism.

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