Despite the recent dips in oil prices, some analysts note there are already signs of a much better market balance. The main argument for improvement is stronger demand for crude in China, the second global energy consumer. Jason Gammel, an energy analyst at the Jefferies investment bank, stated the oil market has already entered the transitional stage from oversupply to shortage. He refers to the latest events and statistics for April.
Indeed, global oil supply has suffered significant disruption in recent weeks from wildfires in Canada and sabotage in Nigeria, Libya, and Venezuela. "I think with continued demand growth over the course of this year and continued declines in non-OPEC supply that we are already seeing in places like the United States, the market actually comes into much better balance by the end of the third quarter and that's the stage for fundamental price recovery," Gammel believes. On the other hand, China stepped up demand in April. Its crude imports surged to 8 mln bpd, 7.6% up from the same month a year ago. Besides, experts take notice that the US dollar is strengthening amid expectations for the funds rate hike in the short term. Obviously, the strong US currency is putting pressure on commodities as they are priced in US dollars.
