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While volatility remains prevalent in the prompt months for crude, which remain under pressure, some semblance of stability could start to return to the market, according to strategists at TD Securities. 

Key quotes

“With OPEC+ production curtailments underway, along with substantial production declines from non-OPEC nations and ETF restructuring eliminating some left tail risk from the market structure, prices have found some support.” 

“As the year progresses beyond June with some 8m bpd worth of OPEC+ cuts, as much as 4m bpd worth of market-driven declines, along with some normalization in demand, the market should soon return to deficit conditions.” 

“The extreme contangos observed in recent history should begin to ease. To express this view, we are long Dec-Dec WTI spreads, anticipating that the left tail may have narrowed sufficiently for market participants to begin eyeing opportunities.”