All systems are a go with strong tailwinds for the set-up in crude markets in the imminent term, TDS’ Senior Commodity Strategist Daniel Ghali note.

CTAs are being forced to cover shorts with a buying program

“Buried in the election coverage are reports that OPEC+ have agreed to delay their unwind of voluntary production cuts by another month.”

“While we remain skeptical that a delay will be sufficient to halt the bleed in supply risk premia embedded within crude oil prices, the risk of a tit-for-tat escalation in the Middle Eastern conflict continues to rise. While traders have concluded that this chapter in the conflict has ended, this geopolitical equilibrium remains extremely unstable.”

“In response, supply risk premia is building again in support of prices, which alongside a resilient demand environment points to notable tailwinds for prices in the imminent term. In this context, CTAs are being forced to cover shorts with a buying program that could total +8% of algos' max size.”