WTI: Upside path persists – TD Securities

TD Securities’ commodity strategists Ryan McKay and Bart Melek note that WTI Crude continues to grind higher as conflict with Iran shows no sign of resolution. They highlight ongoing market tightness despite some easing in deficits, and warn that renewed attacks and increased Chinese activity could deepen supply constraints, keeping the path of least resistance for Oil prices skewed to the upside.

Conflict-driven tightness supports prices

"Crude rallies with seemingly no end to conflict in sight. Another round of escalation and an apparent preference for limited attacks and economic squeeze as opposed to deal-making leaves the energy market on a continued tightening trajectory."

"While the level of market deficit in crude has eased amid a stabilization of higher dark flow volumes, the market remains tight overall."

"Further tightness could still materialize amid these renewed attacks and as signs grow that China is becoming more active in the market."

"We have argued that Chinese refining capacity would need to be tapped in order to alleviate pressure in the product market, but this would effectively shift a portion of the extreme product tightness to the crude market."

"The path of least resistance remains to the upside for crude oil even as prices reach triple digits again."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)