What’s oil about to do to central banks?

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Via Capital Economics:

Oil has been thrust back into the headlines over the past week following a spike in prices that has taken Brent crude back to around $75pb. As a result, the price of Brent has now risen by 45% from the lows seen at the end of last year. WTI crude is up by nearly 50% over the same period. This raises three questions: what has caused the rise in global oil prices? Will it last? And what are the implications for the world economy?

Our Energy service is the place to look for detailed analysis, but the short answer to the first question is that the rise in prices is the result of a combination of easing concerns about the outlook for oil demand and – perhaps more importantly – growing constraints on the supply side of the market. The outlook for demand has been buoyed by expectations of more accommodative policy by the world’s major central banks, as well as tentative signs of an improvement in economic activity in some of the recent data.

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About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.