OIL: RECENT PRICE ACTION IS ASSOCIATED WITH GLOBAL MACRO FLOWS – TDS

Energy markets are not pricing in a significant rise in supply risk premia, TDS commodity strategist Daniel Ghali notes.

A marginal rise in energy supply risk premia

“Our analysis of the cross-section of commodities returns reveals that the rally in crude oil prices is largely consistent with that of the complex, uncovering only a marginal rise in energy supply risk premia.”

“This reinforces our view that recent price action is associated with global macro flows as opposed to idiosyncratic pricing in commodity markets, which ultimately create additional vulnerabilities for prices.”

“Still, momentum associated with geopolitical events may be exacerbated by algo flows in the coming sessions.”