...Oil Price Rebounds From Lows Oil prices bounced off their January lows as reductions in bloated U.S. crude inventories gave hope of a rebounding market. However, the market remains oversupplied given strong growth in global production (particularly U.S. shale), still-weak demand and lack of OPEC price support. Fitch Ratings expects this oversupply to gradually correct as industry capex cuts begin to flow through the system, although this will take time. Crude Inventories Turn Lower Stubbornly high U.S. crude inventories finally began to decline in Q2, dropping about 6% from the record high seen at the end of April. The main driver was higher U.S. refinery utilization (93% in Q2) as refineries exited seasonal maintenance. U.S. refining capacity appears adequate to absorb rising shale production for now, given investments in light- end handling capacity (crude topping units and condensate splitters). Strong Crack Spreads Robust crack spreads created strong incentives for refiners to run flat...
