This is dangerous and short-sighted. In countries like the US and UK, fuel costs are within spitting distance of the records set in 2008, when a big wave of demand destruction spread across the West.
Inflation in China, which prompted two interest-rate rises in Q4 last year, is worrying the government. Another effort to dampen growth can’t be far off. The Fed may end quantitative easing if the US economy picks up, as data on Friday is expected to show it has. That will strengthen the dollar and drive down oil prices.
And the premium Brent (about $98/b) is enjoying to WTI (about $88/b) means we’re in for some kind of correction, soon. Expect a flattening of the contango and a dip in prices back under $80/b, if not lower. And expect the IEA to revise its demand outlooks back down again. Demand destruction, part 2, is on its way.
Update: Saudi oil minister Ali Naimi said today he’s worried about speculators again. No doubt. It’s 2008 all over again.
Update 2: I’ll be interviewing Opec’s Sec-General Abdallah El-Badri next week. Nice guy, always a good interview, always insightful, and with a lot on his plate at the minute.