Supply Dynamics In Support Of A Higher Oil Price

Like any commodity, the oil price over the longer-term is determined by supply and demand factors, with short-term fluctuations due to changes in the market's perceptions of factors that impact on these two elements.

National Australia Bank's economics team suggests in recent weeks the attention of the market has been on the demand side of the equation, which has been weak due in part to unseasonally warm weather in the US. The bank also notes speculators have been on the short side of the market in recent weeks, adding to the downward pressure on prices.

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