Oil: Participants exaggerated the significance of the sharp drop in stockpiles - BBH

Research Team at BBH, suggests that it looks like participants exaggerated the significance of the sharp drop in oil and gas stockpiles. 

Key Quotes

“To be sure, there was not a sudden adjustment to the oversupply.  Rather, it seemed weather-induced.  Moreover, the odds of an agreement to freeze output are remote at best, given the recent comments from Saudi and Russian officials.  Also, Iran's ability to recoup the output lost during the embargo has slowed (if not stalled) over the past period. 

The October light sweet futures contract has already retraced 38.2% of its gains this month.  The 50% retracement is found near $45.40, and the 61.8% retracement is at $44.60.  On top of its own dynamics, a strengthening of the dollar may also be seen as negative for prices.”