The current recovery in oil prices could prove to be nothing more than a short-lived "dead cat bounce," analysts have warned, pouring cold water on hopes of a sustained recovery in crude.
Aided and abetted by reports and data signalling a rise in demand and fall in supply, the price of benchmark Brent crude rebounded this week, climbing more than $2 on Tuesday and closing above $50 a barrel (at $52.30) for the first time in a month.
The surge in prices prompted hopes that the oil price could be recovering finally after a sharp fall from $114 a barrel last June on the back of a glut in supply and lack of demand. On Wednesday, however, a damper was put on proceedings after U.S. data showed a surprise build-up in U.S. crude inventories, prompting Brent to pare gains and close at $51.33.
While prices remained steady on Thursday, at $51.41 for Brent and $47.90 for West Texas Intermediate (WTI, or U.S. crude), analysts said the current rally could be nothing more than a "dead cat bounce" – a temporary recovery from a prolonged downturn.