Macro Outlook: Prices look vulnerable

Prior to the 21 February setback, Brent was close to $120/barrel, the upper end of the trading range and a level that has historically had negative implications for economic activity. We believe that the upward trend in Brent in the early weeks of 2013 was divorced from the fundamentals and reflected unduly bullish expectations for the world economy and the potential for supply disruptions. In the coming months we think that oil prices could trend down in the face of a comfortably balanced market.

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