The Glut Strikes Back as Oil Returns to Brink of Bear Market
- Surplus is harder to kill than Saudis and Goldman predicted
- Brimming inventories and returning supply prolong downturn
Oil Producers Suffers as Prices, Refining Sink Profits
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The bullish spirit that gripped oil traders as industry giants from Saudi Arabia to Goldman Sachs Group Inc. declared the supply glut over is rapidly ebbing away.
Oil is poised for a drop of 20 percent since early June, meeting the definition of a bear market. While excess crude production is abating, inventories around the world are brimming, especially for gasoline, and a revival in U.S. drilling threatens to swell supplies further. As the output disruptions that cleared some of the surplus earlier this year begin to be resolved, crude could again slump toward $30 a barrel, Morgan Stanley predicts.