Oil prices may have bottomed out as supply concerns resurface, according to Commerzbank’s commodity team led by Barbara Lambrecht. The bank cautions traders against treating recent price declines as a sustained trend, pointing to two critical risk factors that could drive prices higher.
Tanker traffic through the Strait of Hormuz, a chokepoint handling roughly one-fifth of global oil consumption, remains severely constrained with only gradual recovery underway. This supply route disruption coincides with US crude inventories sitting significantly below their typical seasonal levels, creating a tighter-than-expected supply situation heading into peak demand periods.
The combination of restricted Middle Eastern shipping flows and depleted American stockpiles suggests upward price pressure could return quickly if geopolitical tensions escalate or demand picks up. Traders who positioned for extended weakness may face reversals as these fundamental supply constraints reassert themselves in coming weeks.
FXnCO Insight
Energy traders should monitor Hormuz shipping data and weekly US inventory reports closely, as current supply tightness could trigger sharp upside moves on any demand improvement or geopolitical flare-up.
Source: FXStreet