Oil: Lower demand and supply stability keeping the market comfortable – TD Securities

According to analysts at TD Securities, OPEC+ appears committed to sticking with its to plan, despite stark market signals which followed the largest potential supply disruption in recent memory, along with a slew of idiosyncratic disruptions which sent OPEC production to its lowest levels in years.

Key Quotes

“While the prospect of lower demand growth and supply stability is keeping the market comfortable in looking past the risks of further disruptions for now, the market is becoming increasingly concerned that while further cuts may be needed, it could be difficult for Saudi to persuade its allies to cut more when the cartel meets in December. Indeed, ABS acknowledged concerns about recessionary forces but continues to believe that they are being driven by negative expectations, with the IEA and the cartel still expecting 2020 demand growth to pick up significantly. Meanwhile, CTAs have increased their short positions across the energy complex as prices send firming downside trend signals which further fuel the bearish sentiment.”