Oil prices have rebounded by over 20% in the last week during a period of highly volatile trading. The rally was sparked by growing evidence of declining US rig counts and multiple announcements of capital spending cuts by oil firms. This prompted short covering by traders, with news of higher than expected US oil stocks on Wednesday offset by recent disruptions in Libya and Nigeria.
The near-term outlook for oil prices is unclear but we continue to expect the price of Brent to end the year at around $60. Elsewhere, stronger than expected growth in US payrolls for January led to a predictable sell-off in the gold market. However, if Fed tightening is gradual and interest rates remain low, there would be plenty of scope for other, more positive factors to dominate.
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