Crude Oil prices are expected to bounce back strongly in second half of 2014 as the US recovery gathers momentum, refineries come out of maintenance and global oil balances tighten once again, according to Barclays Research.

In the short run, oil prices may remain weak but for the Ukraine crisis which could keep the market supported on supply fears.

However, there are three strong reasons why globally oil prices may remain elevated, according to Barclays.

1)Barclays has raised its global oil demand growth forecast higher by 160,000 barrels per day compared to Deember and this is not a short term trend. Since the IEA began forecasting 2014 oil demnad in mid-2013, it has raised its global demnad figure by a total of 600 kb/d.

2) Inventories are perilously low as is evident from February report of IEA. The only mitigating factor for the crude oil market is that bulk of the short fall is in products.

3)Geo-political risk remains high and spare capacity is low. Saudi Arabia has cut production by about 1/2 mn b/d since its peak late last year, and spare capacity has grown a little as a result, but is still low at 2.5 mn b/d, Barclays estimates. "Moreover, as summer approaches, Saudi Arabia is likely to still need a big increase in its own crude oil consumption for power generation as progress in develping alternative fuels has been slow.