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Brent: Calm masks looming price spike – TD Securities

TD Securities’ Senior Commodity Strategist Ryan McKay argues the recent easing in the Oil market is temporary, warning that Brent could still reach $150/bbl or higher if supply risks materialize. He highlights constrained speculative flows, Chinese storage draws, tightening product markets and rapid US inventory declines as factors that may force demand destruction through significantly higher prices.

Calm market hides severe supply risks

"The energy market has entered a period of relative calm, but we argue the recent easing in the market is temporary and renewed periods of angst are just around the corner if there is no resumption of flows imminently."

"Elevated export volumes from the US and other cargoes bought during the April panic are starting to reach their destinations in Europe and Asia."

"As such, refiners have crude on hand for immediate use and, as of now, are opting to wait for a possible end to the conflict before securing their next shipments."

"Elevated exports and refineries continuing to run hot are likely going to keep crude inventories drawing heavily through the summer, with no end in sight."

"Storms are brewing that could still see Brent crude hit $150/bbl or higher."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

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FXStreet Insights Team

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

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