Brent and West Texas Intermediate (WTI) oil prices have fallen around 9% from their late April highs to their early May lows amid a spate of concerns including: Trends in US oil production, OPEC’s commitment to recent supply reductions, rising US oil inventories, the health of the global economy and the pote ntial for a destabilizing US-China trade war.

All told, some of these factors appear eerily reminiscent of last October, the start of a serious sell-off in oil that saw WTI prices plummet from $76.90/bbl to the low $40s and Brent to fall from $86.74 to under $50/bbl.

Late last year, we took a look at supply and demand conditions in global oil markets and (correctly) predicted that the selling pressure was near an exhaustion point and that prices would see a sharp recovery into 2019.

With our targets for crude now achieved, and market volatility on the rise, it’s time for an updated deep dive into the oil markets.

Our conclusion: This is not the beginning of another late 2018 style market swoon nor are we seeing any evidence of excess global oil supplies. Rather we see the recent sell-off as a correction driven largely by hedge fund profit-taking following a record-setting start to 2019 for crude.

In this issue, we update our outlook for crude and explain some of the surprising factors behind last week’s larger-than-expected build in US oil inventories.

“Badly needed energy infrastructure is being held back by special-interest groups, entrenched bureaucracies and radical activists.” That statement this week from President Trump is bound to elicit more than a few “amens” from oil and gas pipeline developers.

The president announced two sweeping executive orders aimed at jump-starting projects stalled by adverse court rulings and state permitting delays. One would rein in state governments’ power to use Section 401 of the Clean Water Act to deny construction permits. It would also direct US agencies to loosen regulation on shipping LNG by rail and truck, seek measures to limit shareholders’ ability to alter companies’ environmental policies and challenge ESG focused retirement funds on the grounds they’re neglecting fiduciary responsibility.

We’re watching closely for any sign of revived activity at delayed natural gas projects such as the Atlantic Coast Pipeline and the Mountain Valley Pipeline, as well as challenged oil pipes like Enbridge Inc’s (TSX: ENB, NYSE: ENB) upgrades of Line 3 in Minnesota and Line 5 in Michigan.