Strategists at TD Securities continue to be bullish Oil after the recent gains consolidate.

Strong fundamentals

Stronger-than-expected demand in the US, pending stimulus in China and the ongoing post-COVID normalization all point to demand surging be over 2 million b/d this year. Furthermore, ongoing OPEC production reductions, which now will likely include a 500K b/d reduction from Russia, also suggest this market should tighten as the year unfolds. Indeed, these realities should generate a deficit in both Q3 and Q4. 

This will more than offset the surplus accumulated in the first half of 2023 and tighten markets. With that, and significantly elevated crack spreads amid a low inventory environment and recent major refinery outages, crude should perform very well. 

We continue to expect WTI to approach the $90 mark in the latter part of the year. So far, we are right on target with our Q3-23 target of $78.