Oil markets are now succumbing to a reversal of systematic flows, TDS Senior Commodity Strategist Ryan McKay notes.

The upside is likely capped for WTI

“Commodity Trading Advisors (CTAs) could remain modest buyers in the short-term in Brent crude, but WTI would need to see prices rally back above $82.50/bbl to renew upside flows.”

“However, we are not anticipating another rout in prices as supply risks are back in focus with tensions building in the Middle East between Israel and Lebanon, while further ship attacks in the Red Sea reignite concerns.”

“A renewed increase in our energy supply risk indicator can support price action in the near term, but ultimately, we still argue the upside is likely capped by increasing global supply and potential OPEC+ increases, which put 2025 balances in question.”