A turn higher in oil prices in coming months and quarters, if forthcoming, should result in considerably weaker Chinese demand growth, as the authorities scale back their aggressive stockpiling policies. Weak underlying Chinese oil consumption, as well as high inventory levels, suggest that reduced stockpiling activity could be reasonably sharp. That would meaningfully undermine the key source of the world’s marginal demand for crude and add to global inventory levels, which continue to trend higher. A number of factors, though, question whether that new trend is about to begin – and should effectively serve as a ‘cap’ on oil prices. Those factors include i) high/rising global inventories; ii) ongoing US$ strength; iii) relatively weak global demand and; iv) the likely increase in US shale oil production once prices reach between $50 to $60 per barrel. Watch the short video below from Senior Strategist, Harry Colvin.