OIL OUTLOOK QUARTERLY BY LLOYDS TSB

We would like to introduce you to our new Lloyds Bank Corporate Markets publication, Oil Quarterly Outlook, written by the Sector team. This publication provides a short to medium-term outlook for crude oil prices.

We would like to introduce you to our new Lloyds Bank Corporate Markets publication, Oil Quarterly Outlook, written by the Sector team. This publication provides a short to medium-term outlook for crude oil prices.

At $97.56 a barrel, Brent crude oil prices have recovered substantially from the $54 recorded last February, but are still some distance from July 2008’s record of $145.91 a barrel. An unusually tough winter in North America and Europe, combined with supply side disruptions, such as the recent closure of an Alaskan pipeline, and improved global economic outlook, have all helped to push oil prices higher. Moreover, the depreciation of the US dollar also helped to contribute to a rise in price. However, growing demand from emerging markets cannot be ignored and will help to keep the oil price elevated in the near future. Thankfully, developed countries are much less reliant on oil than they have been at any other time in the past, minimising the impact of increasing prices on economic growth. In emerging market economies, which are more dependent on oil, recent exchange rate appreciation against the US dollar should help to cushion some of the impact of rising prices. That said, rising oil prices are not only a function of dollar weakness, but also growing demand for a finite resource and are apt to be susceptible to continued speculative interest, as commodities continue to attract non-commercial investment.

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