How high for oil?

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How high for the oil recovery is always an important question given its implications for inflation. At the moment, the oil market has returned to its usual bullishness with all sorts of analysts forecasting a new supercycle:

For me, this is deja vu all over again. There is no doubt that the oil market has tightened with inventories falling in the US:

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The question is why? Demand has recovered through 2020 but it is still very poor. The main reason is that OPEC is holding some 8mb/d off the market.

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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.