Oil prices flying high – BBH

Research Team at BBH, notes that there is a continued recovery in oil prices as the brent rose above $50 a barrel today, a six-month high.

Key Quotes

“The driver is supply. The larger than expected draw down of US inventories, coupled with disruptions in Nigeria, Venezuela, and Libya are taking a toll. OPEC meets next week, but reports suggest attempts to freeze output have been largely abandoned. Although Iranian output is increasing, it will likely take several more months at least before pre-embargo levels are reached. Reports suggest the partial sanctions that have continued, the ease of alternative business, and a purposeful campaign by Saudi Arabia have slowed the Iran's recovery.

The higher oil prices are helping energy sector equities and sensitive currencies, like the Norwegian krone (0.9%), Canadian dollar (0.3%), Malaysian ringgit (0.5%), and Mexican peso (0.3%). The MSCI Asia Pacific Index extended its recovery from two-month lows. The regional index has risen in four of the past five sessions, despite the Fed tightening outlook and the weakening of the Chinese yuan. Europe's Dow Jones Stoxx 600 is about 0.2% lower, though the materials and energy sector are up (1.0% and 0.7% respectively near midday in London).”