Political risk and bad weather keep prices high

After calming down towards the end of last year, political protests and disruption in key producer countries have re-emerged as a key factor driving oil prices higher. What’s more, the extreme cold in many parts of the US and Asia has boosted demand for heating fuels. However, both these factors should prove temporary. The underlying economics still point towards ample supply and falling prices for oil and coal. The price of US natural gas should also fall as temperatures return to normal, although we then expect it to trend higher again over the next few years.