The Week In Hindsight, 02 May 2014
WTI and Brent Crude drifted lower throughout much of this week as poorer than expected economic numbers from the US, UK and Europe over the first half stoked investor concerns over the global growth outlook,while concerns over the crisis in Ukraine also appeared to ease at first.
This culminated in weaker prices for Brent Crude, while higher than expected inventories in the US drove a steep sell off in WTI, leading to a break back below the $100 per barrel mark late on Wednesday.
Despite the poor start, oil prices did regain some ground during the final stage of the week as violence flared once again in Ukraine, prompting further harsh rhetoric from western governments and threats of yet more sanctions to come.
Going forward we continue to believe that an empty pipeline in terms of a resolution to the Ukraine crisis, along with a global growth outlook that remains positive, is likely to support Brent prices over the weeks ahead. This is while we expect WTI to regain its bias toward the upside as a positive year long outlook for US growth is viewed as being likely to underpin demand.
However, with oversupply an issue for WTI, further gains are likely to prove difficult to maintain unless the positive signs seen in some US economic barometers of late are able to lead toward greater consistency in both economic data, as well as investor sentiment over the near term.