Clearly, the market has almost fully priced in the increase in supply risk premiums associated with the conflict in the Middle East. Operators have concluded that this chapter of the conflict is over, but at the very least, this geopolitical balance is fragile. The adage ‘show me the lost barrels’ continues to prevail over a more cautious approach, particularly as the market’s focus shifts to the next OPEC decision, which could potentially bring unwanted barrels back to the market, notes Daniel Ghali, TDS Senior Commodities Strategist.
Next OPEC decision may bring back unwanted barrels
“Our returns decomposition framework suggests that recent reports indicating the group is considering a further delay to its planned production increases have supported prices in the latest session, but kicking the can down the road may no longer be enough to boost prices. and may, instead, only help crude oil prices find a floor.”
“At the same time, barring a further escalation in the conflict, the onus remains on the demand side of the equation to sustainably raise prices from their current levels. The nascent signs of reflationary tailwinds in the cross-section of prices “Commodity prices have provided a cross-current, but the magnitude of these trends remains to be seen.”
“In the short term, our future price simulations suggest that CTA’s future flow is fairly distributed, such that potential flows are no longer asymmetric. Overall, this setup does not point to a worthwhile mispricing of risks.” address without geopolitical advantage.”
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.