With the price of a barrel of Brent crude now over the $40 mark, there is growing speculation that the worst of the downturn in energy prices is over. Since touching 12-year lows near $25 a barrel in January, oil has staged a rally of almost 40% thanks in part to a coordinated effort between larger producers to freeze output at January levels.

With crude trading over $40 a barrel, markets appear excited by the prospect of a march to $50 but Resona Partners believes investors should be careful what they wish for.

“Higher oil prices aren’t a panacea for the global economy’s ills,” said Taro Harumato, who leads energy markets research at Resona Partners. “Low oil prices are actually a boost for economies since it lowers the cost of transportation and reduces operating costs for companies. This notion that higher oil prices will foster improved global growth is a fallacy and there’s a very fine line between joy and pain when it comes to oil prices.”

Oil prices have rallied in the face of data that, ordinarily, would have resulted in sharp falls. One such data point was last week’s inventory numbers which showed a substantial build in US stockpiles to levels not seen since the Great Depression.

“That oil prices kept rising after such a bearish indicator suggests that investors are prepared to see past the glut and focus on more positive data like the Russian-Saudi output freeze and a record-low number of operational oil and gas rigs in the US shale market,” said Harumato.

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