In May, the BBC reported that the oil price rose above US$50 per barrel for the first time in 2016 – with supply disruptions and rising global demand widely-cited as the catalyst for a price rebound.
Joining other leading commodity experts, Abhishek Deshpande, senior oil analyst, Natixis, offered his views on the mid-term outlook for the oil price. While there are signs of growing market confidence, Deshpande warned that any sudden rebounds could be more troublesome in the long-term, stating that “we believe that the market is going up, but if it goes too quickly there will be auto-corrections.”
Against a backdrop of the Canadian wildfires and geopolitical crisis in Nigeria restricting supply, the oil market has gone from a position of saturation to deficit at an extraordinary rate. This has encouraged oil companies to implement expansion strategies based on the oil price rising above US$60. Deshpande’s comments, however, suggest that price volatility may endure for the time-being.
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