With Brent (sweet light crude oil) prices settling at around £56 per barrel and the BP chief expecting costs to fall as low as £12 per barrel (see previous reports here), hedge funds have started to pile in and buy up shares in oil. See:
One analyst reported in Energy Voice today put it like this:
‘The fundamentals are looking a heck of a lot better. We still think this market is a breakout to the upside waiting to happen.’
Sounds good – ‘a breakout to the upside?’
Again, in earlier reports, I’ve mentioned that the International Energy Agency has increased its estimate for global demand growth while at the same time the OPEC strategy to trim the previous glut seems to be holding.
As for shale, the main threat to North Sea crude prices looks to have passed its peak with predictions of output falling.