WTI falls nearly 1.3% on Wednesday, on the backfoot for Asian open

West Texas Intermediate (WTI) crude oil is down in late North American trade by some 1.28% and has fallen from a high of $103.92 to a low of $99.93 into the close. It posted a small gain on Wednesday after day-prior losses following a report showing US inventories unexpectedly dropped last week. WTI crude for May delivery closed up US$0.14 to US$102.19 per barrel, Marketwatch reported. 

The Energy Information Administration reported an unexpected 8-million barrel drop in US oil inventories last week, the largest since January 2021. Nevertheless, it is far from recovering from Tuesday's collapse of more than 5%. Chinese demand-side weakens pertaining to the Covid-19 lockdowns partly forced the International Monetary Fund to cut its global growth forecast to 3.6% from 4.4% when also weighing the disruption of Russia's war on Ukraine and higher inflation.

Meanwhile, the political standoff in Libya has highlighted the fragility of oil supply, as analysts at TD Securities explained. The analysts noted how the global inventories are depleted and offer little buffer.

''The latest hiccup on the supply side also comes at a time when demand for energy products is firming once more, driving a tightening in crude oil timespreads and cracks, and informing our decision to re-engage upside in far-dated Brent,'' the analysts said. 

''Indeed, our tracking of traffic conditions for the 15 largest cities by vehicle registrations suggests that the impact of China's "dynamic" Zero-Covid strategy may already be easing, after catalyzing a sharp drop in energy demand. We also expect that Chinese demand headwinds will soon morph into tailwinds as officials call for additional economic support.''