Analysts are sounding the alarm: The oil price rebound could come to a crashing halt.
But, as CNBC reports Tuesday, analysts say the refinery-driven correction is nothing like the one that took West Texas Intermediate crude to $26 earlier this year, and some of the factors behind it are seasonal.
West Texas Intermediate oil futures are down 11 percent so far this month, after rallying above $50 in the spring. WTI settled a half percent lower at $42.92 per barrel Tuesday, after breaking below its 100-day moving average of $44.25 on Monday.Read more on this looming threat to the oil price rebound here and here.
The world remains oversupplied with crude oil, but the fact that it has become very oversupplied with gasoline is currently worrying the market.
“The gasoline inventories are 10 percent above a year ago level, and that’s feeding back into crude,” said Greg Priddy, director of global energy at Eurasia Group. The real fear is that the demand for crude will drop even further once refineries go offline as they normally do in early fall for routine maintenance ahead of winter fuel refining.