Another supply-side issue appears to have reared its ugly head, as relentlessly-rising USA commercial inventory levels become impossible to ignore. This last week, oil inventories rose to about 528M barrels, or levels last seen in 1982. The conclusion is that the world is awash in oil and there just aren't enough storage locations to put all of it.
Since OPEC - and Russia - surprised the markets with their decision to cap production back in November, crude prices have been largely bullish. IEA data that showed upwards of 90% of producer compliance with those production caps seemed even more so.
However, oil supply levels have been dropping more slowly than expected, while North American shale producers are pumping out even more crude (upwards of 9 million barrels per day most recently) as they nickel-and-dime their way into extracting oil more cheaply from shale deposits. Futures markets now seem to be quickly positioning themselves for the potential that oil prices will be remain subdued for longer than originally anticipated.
In-depth article on expanding US oil inventories and the futures market here
