Oil markets are set to turn bearish: The MUFG Global Markets Podcast

Push-and-pull factors have led oil prices to oscillate wildly this quarter. A confluence of (i) the unravelling of the reflation trade; (ii) COVID-19 Delta variant apprehensions in some geographies; (iii) vaccine optimism with reopenings continuing apace; (iv) mixed economic data out of major economies; (v) a gyrating US dollar; (vi) revolving investor positioning; and (vii) somewhat heightened geopolitical risk premia, have all played a part, with hesitancy to push the oil market in either direction.

Ehsan Khoman, Head of Emerging Markets Research (EMEA), discusses in this week’s podcast why the balancing of cyclical demand headwinds with structural supply tailwinds, leads him to remain bearish on oil prices going forward.

Under the weight of higher OPEC+ output, steadily rising shale, the eventual return of Iranian supply, juxtaposed with a more normalised demand profile, he leans short oil further out along the curve.

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