The rebound in the price of Brent crude to as high as $40 per barrel today is consistent with our end- 2016 and end-2017 forecasts of $45 and $60, respectively, so we would not want to argue with it too much. However, there is little new in the latest data on the fundamentals of supply or demand to justify the recent gains. Instead, prices appear to have been boosted by a combination of improving sentiment in financial markets generally and a burst of speculative re-positioning. We would therefore not be surprised to see prices drop back in the coming weeks – before a stronger recovery takes hold.
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