As the global growth slowdown continues to play out, weaker demand is expected. Absent a quick revival in global growth, it is hard to see the demand picture brightening in the short term.
Furthermore, refineries are unlikely to demand more crude oil in the near future as they perform seasonal maintenance ahead of the driving season and look to work off massive distillate inventories built during the warm winter.
This leaves us with a very unbalanced oil market as it relates to supply/demand. As we reach the tipping point in terms of oil storage, something has to give. Our most optimistic view is that a combination of supply/inventory reductions and a drop in oil prices will ultimately balance the market by year end. But how far prices have to fall when oil producers rush to sell their product remains to be seen.