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Hansen: Oil rebounds after horrendous week

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Crude oil has seen an extremely weak start to 2016 and the first half of this week proved no exception, says Saxo's Ole Hansen. It began as sanctions against Iran were lifted followed by the International Energy Agency's claim that the world was drowning in oil. The fall in oil prices hit global stocks too and Hansen explains why.

But the second half of the week brought some relief. That was primarily down to the European Central Bank President, Mario Draghi, who mentioned the possibility of increased QE. The US inventory report, also out on Thursday, proved helpful too because it wasn't as bearish as expected. By Friday both WTI and Brent moved above USD 31 a barrel.

It's not easy to predict where the price of crude is headed next but Ole explains why we could see some additional short covering. He wonders if this could be the first sign that the bottom in the market has finally been found.