Supply glut will lower oil price

The oil price is creeping up again. But with the fudamentals not improving, and an ample supply, oil looks overpriced and due a correction.

Oil has bubbled up again over the past few days. US futures have broken out of their recent $70- to $80-a-barrel range, climbing to a three-month high around $82 this week.

The recent recovery in risk appetite, along with the decline in the dollar (which bolsters dollar-priced raw materials) has tempted more investors into the market. The number of speculators betting on further price rises is at its highest since May. Yet the fundamentals "have not improved", says Christophe Barret of Credit Agricole. Indeed, they suggest oil is overpriced and due a correction.

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