After a strong round of profit-taking selling , the oil complex is starting the New Year in negative territory once again. Heading into 2014, the oil complex will continue to focus on the ongoing geopolitical issues.
So the battle between a weakening oil demand picture versus the support coming from the very accommodative monetary policies in the developed world economies continues with the winning side flip flopping back and forth.
Barring a major geopolitical event impacting the flow of oil to Europe, I would say that the Brent/WTI spread has likely peaked for the year and will continue in a slowly evolving downtrend throughout the year.
For the next month or so most risk asset markets are likely to be driven by the more normal price drivers, which include the state of the European debt situation, global economic growth and the evolving geopolitical situation in the Middle East.
With geopolitics less of an issue or price driver than it was the last month or so the main oil price drivers are likely to be any and all macroeconomic data on the global economy with oil fundamentals equally important.
With geopolitics less of an issue or price driver than it was the last few weeks the main oil price drivers are likely to be any and all macroeconomic data on the global economy with oil fundamentals equally important.