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Traders are focusing on a continued recovery in demand in the US, which is a much bigger driver of S-D fundamentals than any slower rate of growth in Europe due to COVID-shutterings, according to Bart Melek, Head of Commodity Strategy at TD Securities. The markets main attention is on today’s OPEC+ meeting.

Continued OPEC+ output cuts, rising refinery runs trumping European weakness

“The expectations that OPEC+ commitment to keeping the supply cut regime in place into May likely means that demand will outpace inventories by another 500k b/d over the next three months. This means that there will be little reason to sell in response to the European woes.”  

“Considering the OPEC+ commitment to keeping markets tight suggests that there may well be room for WTI crude to test recent highs near $65/b, as we move into Q3, when demand is likely to jump by over 3 million b/d.”  

“OPEC and Russia may want to test US shale’s ability to increase production, with an implicit bet that they can capture both market share and extra revenue associated with the higher prices. At least for the next few months.”