Crude oil prices are slumping as the left tail continues to fatten, TDS macro analyst Daniel Ghali notes.

Supply risk premia is melting

“OPEC+ is backed into a corner. Supply risk premia is melting, and further delays to planned output increases won't do the trick. Global oil demand growth is weakening, and not necessarily exclusively owing to slowing global growth.”

“There's still a massive risk premium baked into oil prices, a legacy of critically-low spare capacity during the pandemic-era bull market, suggesting the combination of weakening demand growth and rising supply threatens to inflict a lot more damage to prices than anticipated given expected balances.”