IEA's Release of SPR Bearish for Oil, Only in Short-Term
BonTradeThe most surprising and market-driving event last week was IEA's decision to release 60 mmb of strategic stocks over a 30-day period in July (2 mmb per day). After the announcement was made Thursday, each of WTI and Brent crude oil tumbled $10/bbl while other commodities followed. Both the WTI-Brent and light –heavy spread narrowed. We believe the move is bearish for oil prices in the short-term and the light-heavy spread would continue narrowing for some time. Yet, this is just a temporary fix to the long-term problem and we expect oil prices will rise again later in the year (i.e.:4Q11) as tightness in the market emerges again.
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IEA's Release of SPR Bearish for Oil, Only in Short-Term
