Glut belies risk of thinner Opec output cushion

Singapore

AS most of the world focuses on how unfettered oil production will weigh on prices, a few say a rebound is on the cards as the market starts to reflect a growing risk of shortages.

Opec's strategy of keeping its taps open is leaving a smaller cushion if there's an unexpected need for more oil. The group's spare capacity has dwindled to the least since 2008, US government data shows, while global spending cuts have diminished prospects for new output. Prices may jump more than 35 per cent from current levels as they start to reflect the risk of a supply squeeze, according to Citigroup Inc and trader Gunvor Group.