WTI corrects to near 93.00, upside remains favored on higher demand forecasts
|- Oil prices are likely to rebound firmly as IEA has stepped up demand forecasts.
- Substitution of natural gas to oil ahead of Winters is strengthening the black gold.
- Trimmed odds for Fed’s hawkish guidance are also supporting oil prices.
West Texas Intermediate (WTI), futures on NYMEX, has witnessed a minor pullback to near $93.00 after printing a weekly high of $94.20. The black gold is expected to extend its pullback move towards $92.00 but will confidently end the week on a promising note.
Oil prices have recovered sharply this week after the International Energy Agency (IEA) stepped up the demand forecasts dramatically. Energy prices are soaring worldwide as winter is coming and the demand for natural gas is likely to remain on the rooftop. Natural Gas consumers tend to shift to oil to cater to the bulk demand of energy for winters.
Apart from that, the demand for gasoline is accelerating as prices remained on the back foot lately. Therefore, the market participants are discounting the anticipation of a rebound in gasoline prices into oil prices.
Meanwhile, plummeted US dollar index (DXY) after the release of the US Consumer Price Index (CPI) also supported the oil prices. A downward shift in the annual plain-vanilla CPI has triggered inflation exhaustion signals, which have failed to trim the Federal Reserve (Fed) rate hike forecast but will surely trim the extent of hawkish guidance.
Going forward, investors will focus on China’s Retail Sales data, which is due next week. The economic data is expected to improve to 5% from the prior release of 3.1%. It is worth noting that China is the leading consumer of oil in the world and an improvement in China’s Retail Sales may have a positive impact on oil prices.
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