Are consumers retreating?

Our measure of Canada's 'effective' crude oil price, a blend of three key benchmarks, has rebounded by a sharp 25% over the past few weeks, to US$88 p/b from US$70 p/b. But this rally in crude oil prices has been driven by hopes of further action among central banks, particularly from the Fed, and a resurgence in tensions in the Middle East. We doubt another round of policy support would have the desired effects on global demand, however, and the geopolitical tensions should eventually ease. Accordingly, we expect this rebound in oil prices to be temporary.