Oil’s worst summer is yet to come

If crude’s slump back to a 6-year low looks bad, it’s even worse when you reflect that summer is supposed to be peak season for oil. WTI, the US benchmark, fell to a 6-year low of $41.35 a barrel last Friday. We give you the low-down of where’s probably crude heading to.

30% Loss in US crude futures since the start of June 2015

21% Loss in US crude futures in summer of 2011

Worst Fall

LOSS BEATS

-The summer plunge of global financial crisis in 2008 -Asian economic slump in 1998 -The global supply glut of 1986 & surpasses the decline of 2011

What’s Driving it Down?

-Opec’s biggest members are pumping near-record levels to defend their market share

-US production is withstanding the collapse in prices and drilling

Record Output at US Refineries Add to Woes

2.9% Increase in total US motor gasoline product supplied through the fi rst 5 months of 2015

2.5% Increase in total US petroleum product supplied through the fi rst 5 months of the year

17 million bpd Gross inputs to US refi neries in each of the past four weeks

Summer is when refineries are all running hard, so actual demand for crude is as good as it gets. The oil market is still clearly oversupplied and it will get more so as refiners go into maintenance, says Seth Kleinman, Energy Strategy Head, Citigroup.

SOURCE: BLOOMBERG, EIA