Crude oil markets could really feel oversold, however pattern following fashions maintain a conflict chest of dry-powder to deploy in both route, TDS’ Senior Commodity Strategist Daniel Ghali notes.
Crude oil markets appear oversold
“Whereas our return decomposition framework means that markets have continued to erode provide danger premia during the last week, geopolitical tensions stay at a boil and merchants are awaiting extra info on Israel’s targets for a strike in opposition to Iran, protecting a ground on costs.”
“With costs failing to maintain up with downtrend alerts, CTAs are nonetheless set to cowl their shorts this session. The scope for subsequent algo flows stays elevated, suggesting occasion dangers will carry further momentum over the approaching week.”
“Apparently, nascent indicators of reflation proceed to strengthen within the cross-section of the commodities advanced, suggesting that demand developments might favor extra shopping for exercise, providing a cross-current to the erosion of provide danger premia within the occasion that Israel refrains from focusing on power infrastructure as anticipated.”
