IEA director warns of tightening supply on oil market

Brent is continuing to trade at around $48 per barrel. Apart from a brief surge at the beginning of this month, it has not moved far from this level in either direction over the past eight weeks. Things are unlikely to be any different this week either, for the fundamental situation remains unchanged: the market is significantly oversupplied at the moment, as overflowing stocks of crude oil and products - above all in the US - confirm time and time again. 

The front end of the WTI forward curve is in a correspondingly marked state of contango. The December contract for US light oil is trading around 90 US cents lower than the January contract. The only thing that is preventing prices from sliding even further despite the oversupply is the longer-term outlook. 

Fatih Birol, the new director of the International Energy Agency, has warned for example that there is a risk of tighter times again following the period of oversupply on the oil market, which looks set to continue until mid-next year. This is because investments in the oil industry are being significantly cut. There is a danger that investment will be reduced for two consecutive years from 2016 for the first time in twenty years, notes Commerzbank.