“Our balances show essentially no oversupply during the second half of the year,” the IEA’s monthly report said Thursday.
Contributing to the diminishing supply glut, the markets experienced deep output cuts from producers outside of OPEC and a healthy global demand for crude oil, according to the IEA.
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Moreover, the bullish take on oil has caught a lot of bearish traders by surprise, triggering short covering that further supported gains.
“The markets clearly are deriving support from both the IEA report and statements from the Saudi oil minister,” Andrew Lebow, senior partner at Commodity Research Group, told Reuters. “In a crude market that has seen a combined increase of 200,000 gross short speculative positions over just the past six weeks, any talk of a potential coordinated effort from producers, no matter how unlikely the prospect, will lead to short covering.”
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United States Oil Fund