Latest Rally in Oil Prices Driven By Tighter Supplies

The latest rally in global oil prices is driven by tighter supplies rather than driven by an uptick in Chinese demand, Amrita Sen, founder and director of research at Energy Aspects, told Bloomberg.

• Sen pointed to curtailed supplies from Mexico and the US oil production drop in January that is still recovering.
• “I don’t think that the China demand story is the driver for prices right now, if anything we have predicted conservatively on Chinese demand growth…with only 500kbpd year on year demand growth”, Sen said.
• Overall global oil demand is healthy, she added.
• “We have seen inventories not building or even draw counter seasonally in Q1 in certain month. The physical market continues to be very very strong and you see this finally being reflected in prices; prices have lagged what the physical market has been telling us for a good three months now”, she said.
• Regarding future OPEC policy decision, she added that the group is likely to gradually increase supply, once excess inventory has been drawn down.