Extreme, But Unjustified, Pessimism Has Returned to Oil Markets

Oil prices have pulled back sharply in the month of May with prices posting their steepest weekly loss in three months. The front-month contract plunged to an eight-week low of $82.41 per barrel in intra-day in early trading on 7 May, good for a $5.07/bbl w/w decline while Brent for July delivery fell by $3.87/bbl w/w to a settlement of $83.33/bbl.  The oil price selloff appears to have been triggered by a return of demand pessimism thanks to last week’s report by the EIA that showed a 7.3M-barrel build in U.S. crude stocks, the…