- WTI is held up in resistance near $81bbls.
- Short squeeze orchestrated by the OPEC+ cuts could be running out of steam.
West Texas Intermediate, WTI, crude oil was higher on Tuesday and reached $83.08bbls after traveling from a low of $81.80bbls. At the time of writing, Wednesday early Asia, the black gold is trading at $80.86bbls and down on yesterday by some 2%.
Nevertheless, the Oil price rallied overnight on the back of China reporting a 4.5% rise in its first-quarter Gross Domestic Product and on the back of a softer US Dollar that was thrown into a bearish correction.
However, demand concerns persist on the other side of the Pacific and wider Asian nations where demand is dwindling over concerns about inflation and a looming recession.
´´The fact that its economy is growing at its fastest pace in a year should buoyed well for demand in coming months. However, this is being offset by weakness elsewhere. Plunging crack spreads for diesel and jet fuel suggest global demand is soft,´´ analysts at ANZ Bank explained.
´´This is blunting the impact of OPEC’s recent decision to cut output. Outside of OPEC, there are signs of growth. Russian crude exports bounced back above 3mb/d this week. The Energy Information Administration also raised its forecast for US shale. It now expects output to reach 9.28mb/d in April,´´ the analysts added.
Meanwhile, analysts at TD Securities explained that ´´the significant short squeeze orchestrated by the OPEC+ cuts could be running out of steam, but marginal buying activity in WTI crude could temporarily put a halt to the bleeding, keeping prices locked in a tight range.´´
´´Importantly,´´ the analysts said, ´´the production curtailments still underscore our view that the West is losing control over commodity pricing, with significant long-term implications for pricing, geopolitics, inflation and currencies.´´
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