Scotiabank identifies material downside risk to oil prices as structural supply factors, such as record US output and the UAE's OPEC exit, begin to outweigh geopolitical tensions in the Strait of Hormuz.
Key Takeaways
- 1.A material strengthening in the correlation between WTI and US 10Y yields suggests a decline in oil prices would likely drag yields lower.
- 2.Structural shifts, including the UAE's departure from OPEC and rising US production, are creating long-term downside risk for oil prices.
- 3.Despite the closure of the Strait of Hormuz, oil prices are trading heavily near $100/bbl with potential for a break below the 50-day moving average.
Table of Contents
- Analyst Team
- Oil Prices In Focus With Risk For US Yields And Broader USD
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Authors
Shaun OsborneEric Theoret
Securities
WTIBrent Crude OilUS 10-year Treasury yield
Themes
Oil-Yield CorrelationStructural Energy ShiftsGeopolitical De-escalation Bias
Regions
North AmericaMiddle EastLatin AmericaUnited StatesIranUAE