Volatility returns to oil prices

Oil prices broke out of the relatively narrow trading range they had been in for the last few months at the start of March as investors became concerned about the effectiveness of OPEC’s deal to cut supply. However, prices rebounded in the second half of the month on hopes that OPEC would extend its production cuts. We think that it is now more likely than not that the group will do some sort of deal to extend the production cuts beyond June. But OPEC is likely to be especially concerned about growth in US shale production.