Our new oil demand proxy provides a timely indication of the health of global oil demand, and lends insight into whether it is demand, or other factors, that is driving prices at any given time. We find that expectations for future oil demand and supply often matter more for the oil price than the market’s current fundamentals, and that prices can diverge from fundamentals significantly. This seems to be the case at present, which is one factor underpinning our forecast for oil prices to rise in the coming year.
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