WTI tests $66 after IEA says oil demand recovery will outpace growth in supply

Dhwani Mehta FXStreet

“Oil demand recovery will outpace growth in supply,” the International Energy Agency (IEA) said in its latest monthly oil market report published on Wednesday, adding that the demand recovery forecast assumes the COVID-19 situation in India improves.

Additional takeaways

Extra supply is due from Canada, Brazil.

Under the current OPEC+ scenario, supplies will not match expected demand recovery.

OPEC+ has pumped far below the call on its crude.

However, demand recovery is fragile amid India's COVID-19 situation.

Oil glut is gone even as it reduces the demand forecast on India.

Cuts European oil demand for Q1 2021 by 320,000 b/d to 12.7mln b/d.

Cuts 2021 global oil-demand growth forecast by 270,000 b/d to 5.4mln b/d.

Leaves 2H 2021 oil demand forecast largely unchanged.

Cuts America’s oil demand for Q1 2021 by 515,000 b/d to 28.4mln b/d.

OECD oil stocks fell to 2.95bln barrels in march, 1.7mln barrels above the five-year average.

Market reaction

WTI catches a fresh bid and tests the $66 mark on the upbeat headlines from the IEA. The US oil was last seen trading at $65.64, still up 0.62% on the day.

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.

Japanese Yen gains ground as traders await Fed rate decision

The USD/JPY pair loses ground to near 160.25 during the early European trading hours. Traders prefer to wait on the sidelines ahead of the US Federal Reserve interest rate decision under new Chair Kevin Warsh later on Wednesday.

AUD/USD holds steady above 0.7050; looks to Fed for fresh impetus

AUD/USD is consolidating above mid-0.7000s in the Asian session on Wednesday as traders await the outcome of a two-day FOMC meeting due later in the day. In the meantime, the optimism over an interim peace deal between the US and Iran keeps the US Dollar bulls on the defensive. This, along with the RBA's hawkish pause on Tuesday, acts as a tailwind for the pair.

Gold trades with mild negative bias amid some repositioning ahead of Fed rate decision

Gold edges lower during the Asian session, though it holds above the $4,300 mark as bulls opt to lighten their bets ahead of the highly anticipated FOMC policy decision. In the meantime, the commodity remains below the weekly swing high, touched on Monday, and a technically significant 200-day SMA.

DOGE near breakout, SHIB at its ceiling and PEPE leads meme coin recovery

Meme coins are approaching a key technical level, which could determine the next directional bias. Dogecoin struggles to overcome a major resistance level, and Shiba Inu recovery lost momentum near a crucial barrier. Meanwhile, Pepe extends its rally for a sixth straight day, raising the prospects of further upside if momentum persists.

The most important event will be the Fed meeting with Mr. Warsh now in charge

The most important event will be the Fed meeting on Wednesday, with Mr. Warsh now in charge. As more than one analyst points out, the case for holding rates the same is strengthened by the Iran deal and the prospect of the Strait re-opening, although nobody thinks Warsh can marshal enough doves to do a cut this time.

Why a hawkish RBA is no longer enough to lift the Australian Dollar

The Reserve Bank of Australia delivered more than what markets expected: a hawkish hold that should have supported the Aussie. But markets widely ignored it, focusing instead on slowing economic growth and proving that central bank messaging alone isn’t always enough to drive currencies.