The oil market rally is driven by supply-side risk. Meanwhile, the impact on oil supply from Hurricane Beryl was less than expected, adding further downward pressure on the market, notes Ryan McKay, Senior Commodity Strategist at TDS.
CTAs sold 10% of their maximum position in WTI crude oil
“The oil market rally was being driven by supply-side risk and the rally was being extended through the buying flows of Commodity Trading Advisors (CTAs).”
“However, we note that risk premiums associated with tensions in the Middle East tend to erode quickly without an escalation into a broader conflict, and with systematic flows reaching elevated long-term levels, the lack of persistent buying will likely soon weigh on the market.”
“In fact, CTAs sold about 10% of their maximum position in WTI crude oil to start this week, and additional selling could occur if prices fall below $81.30/bbl.”
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.
