As crude oil is trading well above the recent highs it's good to hear from expert, what could cause such rise of prices. Let's hear from Ole Hansen, Head of Commodity Strategy at Saxo Bank.
Ole Hansen (Saxo Bank): Crude oil traded firm ahead of month-end with the recent recovery being driven by continued supply disruptions from Northern Iraq amid a dispute between Baghdad and the Kurdistan region, a weaker dollar, the biggest drop in US crude stocks since November, China's recovery showing continued strength and an improve risk sentiment forcing short covering. In a monthly survey published by the Dallas Fed, shale oil basin executives said the "uncertainty of the depth and duration of bank crisis is causing us to be nervous about capital spending plans in 2023". In addition to access to credit, record costs from a shortage of labour and supply chain issues have led to a slowdown in production growth.
Ole Hansen (Saxo Bank): We maintain a moderate bullish outlook for crude oil as we are concerned that most of the still expected +2 million barrel a day increase in global demand this year is forecast to occur during the second half. With that in mind, a deeper than expected slowdown, as signalled by current U.S. rate cut expectations may reduce the eventual growth, thereby reducing the upside for crude oil later this year. However, in the short term, a break above $80.40 in Brent is likely to signal a return to the range that prevailed prior to the mid-March correction.
