Oil & gas macro outlook: The market remains well supplied

Oil prices were bid higher in late August by exaggerated fears concerning geopolitical developments in the Middle East and supply disruptions in Libya. The reality, however, is that the market continues to be well supplied while demand growth is subdued. Supply is effectively being comfortably underpinned by rising Saudi and non-OPEC production. In all probability major supply disruptions will be avoided in the coming months and Libyan exports will gradually come back on-stream. This could leave scope for prices to weaken somewhat in the near term. A rapprochement between the US and Iran is a wildcard, but if it happens will be bearish for oil prices.

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