Oil prices are ready to surge
Oil prices are poised to rally and this fourth straight quarterly decline should be its last. WTI crude oil is trying to stabilize above the $70 level as the oil market is destined for a deficit in the second half of the year. The outlook for raw demand has too much doom and gloom priced in as the outlook for the US and China should remain optimistic. China may be buying cheaper discounted Russian crude oil, but soon they will demand more and these purchases may broaden as they slowly provide more economic stimulus. The key for oil will be whether the Saudis remain aggressive in getting this market tighter with an extension or slightly deeper production cuts.
The summer high season is here in the US, but some travel plans may be affected as more than a third of the US population is under air quality alerts. The smoke from the Canadian forest fire has the greatest impact from the Midwest to the East Coast.
Next week the focus will be on the OPEC seminar, which is likely to include an update on the Saudis’ thinking for next month. Saudi Aramco will also set prices for August, which will let us know how bad the demand situation has become or whether they will come closer to competing with Russian prices.
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