The latest EIA report has given mixed signals according to the TD Securities’ Global Rates, FX & Commodities Strategy team who warns about excessive optimism pointing out that crude oil inventories have increased even with the US cutting production as a response to tropical storm risks.
Key quotes
“On balance, weak product demand has offset lower crude imports, lessening the chances of significant inventory draws through June. A sustained rebalancing will require stronger demand growth, which could be challenged by fears of a second wave of infections.”
“Furthermore, traders will need to see full compliance from OPEC+, and no sustained recovery in US production.”
“We expect WTI will remain in a narrow range near $38/bbl, with resistance at just over $40/bbl.”
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