Benchmark Brent crude oil futures have bounced by 40% since they hit a six-year low in January. But while oil may well have bottomed, it isn’t likely to surge back to the $100 a barrel region soon. The fundamentals “have not changed much”, says Harry Tchilinguirian of BNP Paribas. Global demand growth next year is set to reach just half of 2010’s pace, according to America’s Energy Information Administration, largely as a result of the slowdown in China.
On the supply side, US oil production is still expected to grow by a total of 14% by 2020; while the rig count has fallen, some shale operators have revived operations, encouraged by the recent bounce in prices. Supplies from oil cartel Opec have risen, with Libya and Iraq cranking up output, while Iran would increase its exports if a nuclear deal with the West goes ahead this summer. The oil market, says Goldman Sachs, is still “well oversupplied”.