Monday, March 14, 2016

The oil rally: life begins at $40

From @theeconomist -- A hint of bullishness has returned. The International Energy Agency said on Friday that crude prices “may have bottomed out”. Brent, the world standard, has breached $40 per barrel and West Texas Intermediate, the American benchmark, is close to it. Today OPEC’s report for February may help too, if it shows that Saudi Arabia and Russia honoured their agreement to freeze output at January’s (record) levels, and Iran’s post-sanctions exports are less aggressive than expected. But the bulls’ case is unconvincing. Other producers are in disarray over when and where to meet to discuss further output curbs. Iran’s first shipment to Europe arrived last week and its officials say exports will rise sharply by May. Global demand remains anaemic and stocks are at record highs. Moreover, the urgency to cut production is less than it was at $30. Expect more turbulence.


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