for Crude oil inventories
The recent increase in floating storage is an ominous sign that the OPEC cuts may not balance the market, and it also poses a threat to the ambitious drilling campaigns by U.S. shale companies that are still recovering from the price crash to below $30 in early 2016.
If refinery utilization remains near current levels, there is the danger of more inventory increases and downward pressure on product prices.
If fundamentals weaken and oil market sentiment shifts, a sharp price correction is likely once investors liquidate their long positions.
The sharp increase in gasoline inventories since the end of last year has raised some concerns, helping deflate the bullish sentiment that has permeated the oil market over the past few months.
OPEC's past cuts were successful in tightening the global oil market and lifting prices, but the agreement last week in Algiers may not be sufficient to rebalance fundamentals, particularly since U.S. shale is poised to rebound.
In order for prices to break out of the current range of $40-$50, there needs to be a sharp drawdown in crude stocks, but so far that hasn't happened.