There are warnings of a looming correction in the oil market, once again.
Morgan Stanley notes in a report today they see “worrisome trends” developing as they find evidence of the market once again being “severely oversupplied.”
Particularly, they address the oversupply in the gasoline market as the single biggest factor to weigh on demand.
In terms of gasoline, it’s the link to gas from refineries because they are the biggest customers of raw crude. Hence, Morgan Stanley’s call is for lower demand over the next couple of months.
A very simple theme as it fits into the story that put pressure on the crude market last year, which was as well one of oversupply.
One quick look to the Canadian dollar this morning also reminds us of the tight correlation between the two markets as the quiet trading in the oil market in the second quarter helped keep the loonie in a quiet three cent range.