The recent decision by the OPEC+ group to postpone planned supply increases has not been enough to stop the downward trend in supply risk premia, according to TDS Senior Commodity Strategist Daniel Ghali.
Pressure Continues on Crude Oil Prices
Ghali explains, “Our analysis shows a decrease in supply risks affecting energy market pricing, along with a decline in demand sentiment reflected in prices. This ongoing trend is putting pressure on crude oil prices.”
While there is usually a delay in the market’s response to OPEC+ decisions, Ghali does not see any immediate signs of improvement. He anticipates some buying activity from CTA trend followers in WTI crude, but believes that the bleed in supply risk premia will persist for now.
Analysis and Implications for Investors
For investors, the continued pressure on crude oil prices suggests a challenging environment for energy investments. With supply risk premia still on the decline, it may be wise to proceed with caution when considering investments in the energy sector. Monitoring market trends and staying informed about OPEC+ decisions can help investors make informed decisions in a volatile market.