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Oil markets should continue to tighten up in the second half of 2016, analysts of the US JP Morgan bank believe.

“Oil markets and prices still appear sluggish relative to our expectations. Crude inventories are falling selectively, but stock draws lag the pace we have anticipated for 3Q2016. Higher than expected output from OPEC members such as Saudi Arabia are softening the rate of inventory declines,” analysts said in a weekly Oil Market report, obtained by Trend.

Oil prices hit their lowest level since May, falling towards $44 a barrel on July 26.

Brent, global benchmark, was down by $0.23 trading to $44.49 a barrel. US WTI crude was down $0.36 to $42.77 a barrel.

The drop in prices was a result of concerns that a long-awaited rebalancing of the market would be delayed due to excess supply.

According to the latest OPEC data, the total cartel’s oil production in June increased by 264,100 barrels per day to average 32.858 million barrels per day.

Saudi Arabia produced 10.308 million barrels per day of oil in June compared to 10.242 million barrels per day in May.

JP Morgan’s analysts said that with Brent prices back at their lowest levels since early May, the outlook for oil markets is being shaped by oil-specific factors, rather than the macro-economic outlook.

“Consequently, we expect prices to remain uncorrelated in the coming weeks from wider financial market developments,” analysts said.

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