New York Fed: Oil prices rose again owing to increasing demand and decreasing supply

According to the New York Fed’s Oil Price Dynamics Report, oil prices rose again owing to increasing demand and decreasing supply.

Key highlights:

• Strengthening demand expectations together with a perceived tightening in supply and an increasing residual drove oil prices up for the second consecutive week. In 2017:Q1, steadily loosening supply conditions triggered a decline in oil prices.
• The 2017:Q1 developments largely offset the 2016:Q4 oil price increase that was driven by contracting supply and strengthening, albeit volatile, global demand.
• Overall, since the end of 2014:Q2, both lower global demand expectations and looser supply have held oil prices down, though this trend seems to have reversed in 2016:Q2 and 2016:Q4.