Oil: The rally may be fragile and lose momentum – TDS

After dropping some nineteen percent from its mid-April high, Oil surged over three percent alongside the equity markets. Nonetheless, economists at TD Securities do not expect the rally to endure.

Rally hard to sustain

WTI jumped north of $70, with Brent nearing $75 after straddling the lows found back in mid-March.

The impressive rally is very likely the result of traders covering their short exposure and rebuilding their long bets, after recent aggressive moves to the short end of exposure. This suggests that the rally may be fragile and lose momentum.