David Fyfe

If you do get any incremental production increase from OPEC - read Iran - you're going to sustain stock builds.

The Saudis have just 2 million bpd in spare capacity. In a 90-92 million bpd market, 1 million bpd of spare capacity isn't much.

There is no shortage of geopolitical risk among producers but at the moment that is providing a floor to prices because otherwise the market is very well supplied, you morph from premium in times of tightness in the market to a concept of risk floor and that is clearly where we are at the moment.

Certainly the balances have all moved in the same direction, acknowledging that several months of $50 oil is going to cause a supply-side reaction and I wouldn't disagree with that, but it is still a little too early be calling a floor for prices having been reached. I think we're going to have a pretty choppy, pretty volatile first half.

I suspect there is some potential for that contango to steepen. Particularly as companies are curbing their spendingthat looks to me like a very cheap back end of the curve.