According to analysts at TD Securities, for the oil markets, the diverging supply themes in energy markets remain the top story of the day with Brent-WTI still widening.
Key Quotes
“While crude markets are feeling the pain of waning risk appetite as US-China trade tensions escalate, energy market observers are also starting to fret that OPEC+ can’t even agree on a date for their next meeting, despite the fact that the original date set by the cartel is less than a month away. This meeting may be particularly noteworthy as Iranian tensions remain at a boil, with early readings suggesting that the latest oil export print could drop to only 400kbd, adding a political angle with rivals in Saudi profiting from the void in market share.”
“With Bolton officially blaming Iran for the recent attacks on oil tankers in the Gulf, warning that any assault would “risk a very strong response”, geopolitical risk in the Gulf is unlikely to subside any time soon. Brent crude markets are implying scarcity with a robust backwardation, but WTI’s contango suggests that the market sees supplies as plentiful “” lending further support to a Brent-WTI widener trade as carry works in favor of both legs. CTAs, however, are acting on a separate divergence, as they load up on gasoline and continue to short heating oil with momentum signals contrasting.”
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