WTI slides to low $100s amid focus on global growth slowdown & as dip-buyers wait on sidelines

Oil prices have turned lower again this Tuesday, with front-month WTI futures dropping back from Monday’s highs near $110 per barrel to the low $100s with global growth concerns in focus. At current levels in the $102s, WTI is now trading with on-the-day losses of a little over $4, with losses exaccerbated in recent trade in wake of the release of the latest International Monetary Fund (IMF) World Economic Outlook report that saw global growth forecasts for 2022 and 2023 downgraded due to rampant inflation and the Russo Ukraine war.

With WTI having slipped back below its 21-Day Moving Average in the $103.40 area, bears are now eyeing a test of the 50-DMA just above the $100 level. But commodity strategists have warned that any further dips back to/below $100 may be subject to being bought into. After all, recent developments in the Russo-Ukraine war suggest a rising risk of a protracted conflict with Russia amping up its assault in Ukraine’s east, meaning the outlook for Russian energy exports remains cloudy. French Finance Minister Bruno Le Maire said on Tuesday that an EU-wide embargo on Russian oil imports is being worked on.

Meanwhile, broader OPEC+ supply concerns also remain a key market focus. A Reuters survey released on Tuesday showed that the group missed its oil output target by 1.45M barrels per day (BPD) in March. Granted, 300K BPD of that miss was due to falling Russian output due to sanctions. But the latest survey highlights the ongoing struggles of smaller OPEC+ producers (namely in Africa) to raise output.

These challenges are likely to have worsened in April. As a reminder, Libya’s National Oil Corporation on Monday announced a force majeure at its largest oil field (Al Sharara) and warned of “a painful wave of closures” amid internal political machinations. With Russian output losses expected to have risen to 1.5M BPD in April and 3M BPD in May, and as the group continues to increase output quotas at a very steady pace of about 400K BPD each month, the outlook for a near-term rebound in OPEC+ supply is remote.