Barclays noted that desptie pockets of weakness in global business confidence and mixed signals on growth from several of the world's major oil consuming nations, crude oil balances have been much tighter than expected.

In the short run, crude oil prices may be showing signs of weakness but is set to bounce back strongly in second half of 2014 as US recovery gathers momentum, refineries come out of maintenance and global balances tighten once again.

Barclays noted that desptie pockets of weakness in global business confidence and mixed signals on growth from several of the world's major oil consuming nations, crude oil balances have been much tighter than expected so far this year, providing robust support to prices.

Positive factors for Oil demand and prices

-Bitterly cold US weather although milder European temperatures partially offsets, net effect is strong OECD demand.

-Surge in China imports which hit an all-time high of 6.65 mn barrels per day in Jan, up a whopping 40% since October 2013

-OPEC outages remain at the historically high level of around 2.5mn b/d thanks to sanctions on Iran, ongoing disruption in Libya,sabotage and theft in Nigeria and attacks on infrastructure in Iraq

-Global oil demand remains strong and demand growth forecast is now 160 kb/day higher than in December. IEA has raised in 2014 oil demand forecast to 600 kb/day.

- Oil inventories are low.