WTI: OPEC+ supply increases to drive prices just below $70/b into Q3-2021 – TDS

US WTI Crude Oil extended its gains and neared $73. However, strategists at TD Securities believe the upside for the black gold is quite limited.

WTI is not expected to go much above $73.55/b

“While we think that both WTI and Brent may move above their current $72.50/b and $75.38/b, there is limited upside for now as most of the positives have been priced. WTI is not expected to go much above $73.55/b. However, should OPEC+ continue struggling to deliver on the promised production increases, a move north of $75/b is quite likely.”

“For now, given the Fed's move toward the tapering of its outsized asset purchase program late in 2021, which may reduce liquidity, future energy demand expectations and appetite for reflation exposure in oil, prices may drift lower.”

“OPEC+ supply increases should also start hitting the market before a demand recovery fully materializes, which may well drive prices just below $70/b into Q3-2021.” 

“Additional sales of crude from strategic reserves in China is likely to be another catalyst containing speculative enthusiasm and may raise appetite for short acquisitions at these price levels.”