WTI crude oil sellers approach $91.00 amid mixed clues

• WTI holds lower ground after snapping a two-day uptrend on Friday.
• Aramco’s hopes of higher energy demand fail to recall oil buyers amid the market’s fears of recession.
• OPEC, IEA downgraded yearly demand forecasts, Fed hawks continue to ignore softer inflation.
• FOMC Minutes, US-China headlines will be crucial for near-term directions.

WTI crude oil remains pressured at around $91.15, down for the second consecutive day, as traders await fresh clues for clear directions during Monday’s Asian session. In doing so, black gold recently ignored price-positive headlines from one of the world’s key oil companies from Saudi Arabia.

Amin H. Nasser, CEO of Saudi Aramco, said, “Oil demand to continue to grow for the rest of the decade, despite downward economic pressures on short-term global forecasts.” His comments should have helped the black gold buyers but could not amid offbeat markets.

That said, downbeat demand forecasts for 2022 by the Organization of the Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA), published on Thursday, appear to weigh on the quote. OPEC said it lowered the 2022 full-year demand growth forecast to 3.1 million barrels per day (bpd) from 3.36 million bpd reported previously, per Reuters. "2023 world oil demand to rise by 2.7 million bpd, unchanged from the previous forecast," the forecasts add. The OPEC update also mentioned that the 2022 global economic growth forecast was lowered to 3.1% (prev. 3.5%), 2023 view was trimmed to 3.1% with significant downside risks prevailing.

On the other hand, the EIA expects the global oil demand to rise by 2.1 million barrels per day in 2023 to surpass the pre-Covid levels at 101.8 million bps. “Demand growth is expected to slow from 5.1 mln bpd in 1Q22 to just 40,000 bpd by 4Q22,” adds EIA. The report also mentioned that the world oil supply hit a post-pandemic high of 100.5 million bpd in July.

It’s worth noting that receding inflation fears in the US and improvement in China’s covid conditions, however, put a floor under the energy benchmark’s prices. Even so, the hawkish Fedspeak and cautious mood ahead of Wednesday’s Federal Open Market Committee (FOMC) Minutes seem to challenge the bulls.

While portraying the mood, Wall Street closed firmer but the S&P 500 Futures print mild losses at the latest. That said, the US 10-year Treasury yields closed mildly negative, down 5.6 basis points (bps) to 2.83%, but remains sidelined at around 2.84% at the latest.

The WTI crude oil traders will pay attention to China’s monthly Retail Sales and Industrial Production for July and will offer immediate directions.

Technical analysis

A convergence of the five-week-old descending trend line and the 21-DMA restricts the short-term WTI upside to around $93.50. The oil bears are on their way to the $90.00 threshold before challenging the monthly low of $86.40.