Bart Melek, head of commodity strategy at TD Securities, believes the rebalancing of the crude market will come into the next year. He expects WTI to rise toward recent highs just below the $45 mark, however, a higher trade range between $45 and $50 is not likely this year.
“With US demand continuing to recover, crude oil inventories dropping sharply for another week, OPEC+ very likely matching supply in line with demand increases and US production sliding over 2 million b/d since March, the crude market is very likely to rebalance into 2021. This, along with ample risk appetite, an upcoming trillion dollar US stimulus program and a vaccine on the horizon all suggest that WTI crude may test recent highs, moving toward resistance just under $45/bbl.”
“Given OPEC+ will continue to match its sequestered supply to the growing demand and coronavirus risks still remain a major global demand risk factor, a sustained breakout into a higher trading range of $45-50/bbl is unlikely this year.”