GUNDLACH: How can oil go higher with this fact in play?

As the global economy grows, the demand for oil grows as well.

But oil prices are a function of both supply and demand. And it’s pretty clear that supplies are high.

In a webcast for investors, DoubleLine Capital’s Jeffrey Gundlach shared his “chart of the day.” It’s the direction of U.S. crude oil inventories in each year since 2005.

As you can see very clearly in the black line, 2015 has been a year of very high excess oil supply.

How can oil go higher with this fact in play, Gundlach asked.

WTI crude oil is trading at around $US40 a barrel. a level Gundlach has previously warned could come with “terrifying” geopolitical consequences

On Wednesday, the Energy Information Administration is expected to reveal that crude inventories rose for an eigthth straight week.

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