Massive risk premium included in oil price – TDS

Crude oil prices are falling as the left tail continues to fatten, notes TDS macro analyst Daniel Ghali.

Supply risk premiums are melting

“OPEC+ is backed into a corner. Supply risk premiums are melting, and further delays in planned production increases will be futile. Global oil demand growth is weakening, and not necessarily because of a slowdown in global growth.”

“There is still a massive risk premium built into oil prices, a legacy of extremely low spare capacity during the pandemic bull market, suggesting that the combination of weakening demand growth and rising supply threatens to do far more damage to prices than was anticipated given the expected balances.”