WTI retests $70.50 after IEA says oil demand to surpass pre-pandemic levels by end-2022

Dhwani Mehta FXStreet

“Global oil demand should surpass pre-covid levels by end of 2022,” the International Energy Agency (IEA) said in its latest monthly oil market report published on Friday.

Additional takeaways

OECD industry stocks in April fell 61.3 million (mln) barrels below their 2016-2020 average to 2.926 bln barrels.

Recovery will be uneven not only amongst regions but across sectors and products.

Production rises at current pace set to be nowhere near levels needed to prevent further stock draws.

Total oil supply from OPEC+ set to increase by 800,000 bpd in 2021 if it sticks with existing policy.

Oil demand rise underlines enormous effort needed to get on track for climate goals.

OPEC+ needs to open the taps to keep world oil markets adequately supplied.

There is room in 2022 for OPEC+ to boost production by 1.4 mln bpd above its July 2021-March 2022 target.

Oil demand is set to rise 5.4 mln bpd in 2021 and a further 3.1 mln bpd in 2022.

Non-OPEC+ oil output is set to rise 710,000 bpd in 2021.

Market reaction

WTI holds the renewed upside near $70.50 on the upbeat headlines from the IEA.

The US oil was last seen trading at $70.47, marginally higher on the day, having staged a V-shaped recovery from daily lows of $69.69 reached earlier in the Asian session.

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

AUD/USD hangs close to monthly lows, still defends 0.7100 ahead of Fed decision

AUD/USD retains its negative bias for the third straight day, defending 0.7100 while trading close to a monthly low in Wednesday's Asian session on Wednesday. The US Dollar stands firm near a two-week high as the anticipated Fed rate hike and oil-driven inflation fears continue to push US bond yields to a multi-year high. Furthermore, escalating Middle East tensions benefit the safe-haven buck and weigh on the risk-sensitive Aussie.

USD/JPY holds firm above 155.00, awaits Fed policy announcements

USD/JPY climbs to a fresh one-week high above 155.00 in the Asian session on Wednesday amid a bullish US Dollar. Oil-driven inflation fears, along with the anticipated Fed rate hike, continue to support surging US bond yields. Moreover, rising US-Iran tensions underpin the USD's reserve currency status. The pair, however, remains below the mid-155.00s as bulls seem hesitant ahead of the Fed decision later today and the BoJ meeting, starting on Thursday.

Gold traders seem noncommittal below $4,350; eyes Fed rate decision

Gold clings to modest intraday gains through the first half of the European session, albeit it lacks follow-through buying and remains below $4,350. The US Dollar eases from a two-week high amid some profit-taking, offering support to the commodity. Traders, however, seem hesitant to place aggressive directional bets and opt to wait on the sidelines heading into the key central bank event risk.

Cardano's bearish breakout warns of a 15% downside risk

Cardano (ADA) hovers around $0.1900 at press time on Wednesday after a 6% decline the previous day, breaking below a crucial support level. Declining on-chain activity across the Cardano ecosystem, with reduced transaction count and Real Economic Value (REV), suggests waning user demand.

Fed decision in focus

Starting with the most important, the Fed decision. Heading into the event, data showed a rather punchy US August jobs report, which, you will likely recall, triggered a hawkish Fed rate repricing in rates markets. However, the recent US August CPI print mattered more.

How Japan became the World's Banker and why that era may be ending

Japan's ultra-low interest rates helped finance trillions of dollars in global investments for more than a decade, making the Japanese Yen one of the world’s cheapest sources of funding. With the Bank of Japan expected to tighten policy again this week, that advantage may be entering a new phase. While most major economies raised interest rates, Japan remained the world's outlier.