Uncertainties will cap oil price rise as economies reopen

OIL prices have cemented their march up, led by a combination of supply cuts and quicker-than-expected demand recovery as economies gradually re-open for business. But high stock levels, a potential return of shut-in production and uncertainty around demand recovery are likely to cap the upside.

ICE Brent futures have nearly doubled to above US$40/barrel since hitting a multi-decade low in mid-April.

While general euphoria around the world's emergence from Covid-19 and demand recovery are factors, a big impetus to prices has come from a combination of voluntary and involuntary supply cuts.