OREANDA-NEWS. August 28, 2009. Crude futures corrected lower in the past week, finally breaking out of a narrow range in London as investors turned their attention back to oil fundamentals and rushed to book profits. Brent was lacking direction for the majority of the past week, sitting idle while WTI tested fresh 10-month highs. As a result, NYMEX crude overtook London prices and is set to continue trading at a premium to Brent.

Still, as expected, the market has started correcting lower, similar to the late June correction we saw after the May rally. The double top on Brent has fired back and the market quickly came off towards USD 70. Fundamentals do not justify immediate gains and the seasonal demand is just not there yet.

Gasoline demand has held relatively well this summer, but demand for distillates has yet to kick in. Notably, the front end was also slightly overbought this month and we only expect there to be a significant rise in prices in the winter. Investors are waiting for a pickup in economic activity and a price revival in the fourth quarter.