Oil Continues to Crash

May 14, 2012 8:39 AM EDT
Oil futures have been under pressure for weeks due to increasing supply and easing geopolitical tension in the gulf region. Today oil is on the move again pre-market, with the price of West Texas Crude breaching support at $95 and Brent prices nearing $110.

The move comes after Saudi Arabian oil minister, Ali al-Naimi, said the price of Bent could see $100 per barrel as supply outpaces demand by 1.3 to 1.5 million barrels per day.

Data last week showed that Saudi Arabia pumped 10.1 million barrels a day in April, levels not seen in 30 years.

Bank of America analysts agree with al-Naimi. They see $90 a barrel for WTI in the short term and Brent oil at $105 a barrel.

"A strong backwardation in gasoil futures in Europe and the U.S. is "unsustainable" as increased supplies from refineries cause inventories to grow," according to Bank of America.

"Selling gasoil in July and buying the August contract looks like an appealing trade to us, as we believe the current strong backwardation in the gasoil market will become unsustainable once inventories start to build," said London-based, Sabine Schels, in a report dated May 11.

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David S. Band-Sarasota on 2012-05-14 11:42:57
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going to tank big time.

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