Oil market upside was being driven by supply side risk tied to boiling Middle East tensions, and the rally was extended via Commodity Trading Advisor (CTA) buying flows, TDS Senior Commodity Strategist Ryan McKay notes.

CTAs are set to sell 10% of their max WTI crude position

"Oil market upside was being driven by supply side risk tied to boiling Middle East tensions, and the rally was extended via CTA buying flows."

"However, we highlight that the risk premia associated with Middle East tensions tends to quickly erode without an escalation to a broader conflict, and with systematic flows hitting elevated long levels, the lack of persistent buying is likely to soon weigh on the market. Indeed, CTAs are set to sell roughly 10% of their max WTI crude position, with the $80/bbl region serving as additional key selling levels."