Are oil prices beginning to stabilise after last week’s rally? Saxo’s Ole Hansen believes so, despite the ongoing violence in Iraq. He says because supply pipe lines have not yet been disrupted in southern parts of the country, the market is more settled. However, Hansen stresses that Brent Crude must stay above USD 111 per barrel and for WTI above USD 105.

There is though some good news after US oil production rose to a 44 year high. Although the country cannot export that by law, Hansen believes that could change which would help alleviate potential supply pressure. There’s also talk that the US and Iran could hold discussions about the Iraq crisis, perhaps even leading to the pariah state increasing exports.

Meanwhile Russia says it has cut off gas supplies to Ukraine after Kiev failed to meet a deadline to pay its large bill. But no need to panic says Ole Hansen. He believes it shouldn’t have an impact on gas flows through Ukraine to Europe. Furthermore because of summer temperatures demand in Ukraine is low. Hansen, however, warns that a solution will have to be found over the next few months as demand picks up.