TD Securities analysts offer a bullish outlook on WTI following the OPEC and its allies (OPEC+) oil output cuts, US oil inventory drawdown, and a potential increase in Chinese oil demand. Despite concerns surrounding global economic weakness and a lackluster risk appetite, crude oil continues to hold on to the strong gains made recently as the market focuses on the EIA data showing broad inventory draws and the unexpectedly large OPEC+ production cuts.
The crude complex is pricing in a much tighter supply-demand environment for the rest of 2023, putting the previous OPEC statements suggesting a Q2 surplus and demand concerns amid the evolving bank crisis in the rearview mirror. TD Securities anticipates that the combination of OPEC+ cuts, low US petroleum complex inventory levels, and the upcoming sharp increase in Chinese demand will send WTI into $90+ territory in the second half of the year, with Brent not far off the triple-digit mark, notwithstanding pending economic weakness in the Western world.
