CTAs poised to pressure WTI as OPEC+ shifts strategy – TDS

CTAs will sell WTI crude in any scenario for prices this week. This selling activity is likely to be less significant than that which we expect in gold markets, but could weigh on prices nonetheless, TDS' Senior Commodity Strategist Daniel Ghali notes.

WTI faces selling headwinds despite tight supply outlook

"Ultimately, crude markets will struggle to absorb additional barrels from OPEC+ over the coming months, which we argue reflects a strategic pivot in policy driven by an attempt to a) test US shale production; b) improve compliance; and most importantly c) regain the supply-side leverage required to combat lower oil prices in the event of a slowdown in demand."

"Energy demand remains resilient, US shale production is peaking, Venezuelan export licenses have expired, and geopolitical risks surrounding Iran remain elevated— all of which will likely act as a shock absorber to lower prices."

"Still, OPEC+ was ultimately forced into this strategic pivot, and remains emboldened to bring these barrels back during seasonally favorable months; markets will struggle to absorb these barrels particularly following the summer months. The path to sustainably higher prices remains extremely narrow."