Oil market fundamentals suggest that the fall in global crude prices has gone too far.

News agency Bloomberg has reported that the global oil market is actually healthier than it looks. Quoting a report published Monday by Morgan Stanley analyst Adam Longson, Bloomberg said physical markets for crude have stabilised or even strengthened in recent weeks.

“While oil fundamentals aren’t strong, physical markets do not corroborate the substantial weakness in flat price,” Longson said in the report. The “latest oil pricing pressure appears more financial than physical.”

Among the more buoyant signals is China demand, despite the headline macro data. This remains resilient, said Longson. The country’s apparent demand for gasoline rose 17 percent in July, the highest growth rate so far this year.

China is also set to keep buying oil to maintain its strategic reserve. It will add crude to two additional sites with a combined capacity of 50 million barrels in the second half of this year, according to the International Energy Agency. The nation bought more than 500,000 bpd of oil that was surplus to daily requirements between January and July, according to data compiled by Bloomberg, while China National United Oil Co, the trading arm of the country’s largest energy group, is on course for its biggest ever Middle Eastern crude purchases in Singapore.

Longson also pointed to the conclusion of Mexico’s annual hedging programme as a further weight lifted from the market. Mexico locked in 2016 prices for 212 million barrels, its finance ministry said on 20 August, the biggest hedge undertaken by any national government. The programme was an “under-appreciated negative” for prices and its completion “removes a bearish overhang for oil,” Longson was quoted as saying.

26th August 2015