"Reflecting the higher risk premiums associated with the deterioration in the security situation in Yemen, we have revised our Q2 oil prices slightly higher," NAB said in its Minerals energy and commodities update yesterday.
"We expect oil prices to stay range bound around their current levels for the coming two quarters, before recovering more notably towards the end of this year as the expected ‘cliff' phase in US supply kicks in."
Backing up NAB's claim is OPEC's forecast of a strong pick-up in global oil demand this year that is largely accounted for by non-OECD, oil intensive countries such as China and India; while most OECD countries - with the standout exception of the US - are expected to show declines.
On Monday, an analyst at Barclays said demand needs to improve and supply reduced if oil prices are to stabilise, but does not see enough signs of either happening at the moment.
Lipow Oil Associates president Andy Lipow also echoed NAB's concern over Yemen, saying it could spill into Saudi Arabia, but added that a decline in supply and the upward projection in demand would "get the oil market in balance faster than expected".
In April to date, oil prices have tracked higher than the monthly averages for March on the back of escalating violence in Yemen caused by the standoffs between Shiite Houthi rebels and authorities, followed by renewed airstrikes by Saudi Arabia on the Houthi militants.
However, NAB said the threat of a serious supply disruption was "unlikely at this stage, given that oil tankers headed towards the northern European markets could circumvent the Bab Al-Mandeb chokepoint by going around the southern tip of Africa".
"In the meantime, tentative signs of a slowing US field production rate after peaking in late March and stronger domestic gasoline demand have allayed fears of an indefinite build-up in the US crude stockpiles, which have already reached record levels and raised concerns that some storage hubs are approaching their capacity limits," the bank added.
"These factors provided some support to the oil indices, with West Texas Intermediate currently hovering at around the $55/bbl mark, while Brent and Tapis are within the low US$60s.
"US production is likely to slow significantly more in the second half of 2015 as the effect of the sharp reduction in rig count since December overwhelms the productive efficiency gains of existing wells."
US crude inventories rose to a record high for a 15th straight week in the week ending April 17 to 489 million barrels, with the storage in Cushing reaching the highest record of 62.2MMbbl.
"The US dollar has lost momentum lately on Index on recent soft US economic partials, which are driving expectations that the US Federal Reserve will raise interest rates more gradually than previously expected," NAB said.
"These factors provided a temporary respite for oil prices."