The partial recovery in oil prices over the last month is based on shaky ground. An immediate meltdown in the euro-zone may have been averted, but Europe is sliding into a deep recession and the risks that the single currency breaks apart remain high. In the meantime, the fact that additional policy stimulus may be required in both the US and China simply underlines the fragility of global demand. The crises in the Middle East provide the main upside risks, but we judge the chances of a major supply shock to be relatively small.
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