WTI stays defensive above $75.00 on mixed OPEC oil demand forecasts, API inventory build

WTI crude oil traders struggle for clear directions around $75.30 during Wednesday’s Asian session. In doing so, the black gold differs from a three-day uptrend from the yearly low amid the market’s cautious mood ahead of today’s Federal Open Market Committee (FOMC).

Adding strength to the WTI inaction could be the mixed oil demand forecasts from the Organization of the Petroleum Exporting Countries (OPEC), as well as headlines surrounding China.

“Oil demand in 2023 will rise by 2.25 million barrels per day (bpd), or about 2.3%, the OPEC said in a monthly report, after growth of 2.55 million bpd in 2022. Both forecasts were unchanged from last month,” reported Reuters. The news also added, “While keeping the annual demand growth forecasts steady, OPEC trimmed the absolute demand forecasts in the fourth quarter of 2022 and the first quarter of 2023. Chinese demand, hit by COVID containment measures, has contracted in 2022,” OPEC said per Reuters.

On a different page, the International Monetary Fund (IMF) Managing Director Kristalina Georgieva was spotted expecting slower economic growth for China due to the latest jump in the daily Covid cases. Additionally, Bloomberg came out with the news suggesting that the Chinese leaders delayed the economic policy meeting due to the COVID-19 problems.

Oil bulls could have cheered the downbeat US inflation data but a surprise increase in the American Petroleum Institute’s (API) weekly inventory for the week ended on December 09, to 7.819M versus -6.289M prior, challenge the black gold buyers.

Above all, doubts over the market’s fears of fewer rate hikes and cautious mood ahead of the Fed’s verdict challenge the WTI traders.

Moving on, the risk surrounding China and pre-Fed moves could restrict WTI moves. Also likely to limit the Oil moves could be weekly official inventory data from the US Energy Information Administration (EIA), prior -5.187M.

Technical analysis

The 10-DMA precedes a five-week-old descending trend line to restrict short-term WTI crude oil upside near $75.40 and $78.80 in that order. The pullback moves, however, remain elusive unless refreshing the yearly low of $70.30.