Bart Melek, Head of Commodity Strategy at TD Securities (TDS) beileves that there is no sustained downtrend in crude oil prices, despite the latest sell-off sparked by fears over a global economic recession.

Key quotes

“Despite unexpectedly large crude oil (5.05 MM bbls) and gasoline (2.48 MM bbls) inventory draws, concerns surrounding global economic weakness, diminishing crack spreads and a lackluster appetite for risk have kept crude oil prices from bouncing meaningfully higher following the EIA data.”

“A sharp rise in US product demand (+891k b/d) also did little to lift prices. With WTI crude trading near $76.50/b and Brent trending near $80/b, worried traders have largely erased all the gains from the OPEC+ production cut announcement.”

“Specs are no doubt aggressively cutting the recently acquired long exposure amid growing concerns that the petroleum complex will become oversupplied, as demand moderates in response to weakening economic conditions.”