WTI eases towards $93.00 on OPEC/IEA demand forecasts, USD rebound

• WTI retreats from one-week high, probes two-day uptrend.
• OPEC, IEA anticipate world energy demand to ease in 2022, and increase next year.
• Mixed sentiment, light calendar could restrict short-term moves.
• US Michigan Consumer Sentiment Index eyed for clear directions.

WTI crude oil prices remain sidelined at around $93.30-35 during Friday’s Asian session, pausing a two-day recovery around the weekly top. The black gold’s latest inaction could be linked to the light calendar and mixed catalysts. However, downbeat demand forecasts for 2022 by the Organization of the Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA), published on Thursday, appear to weigh on the quote.

That said, OPEC said that it lowered the 2022 full-year demand growth forecast to 3.1 million barrels per day (bpd) from 3.36 million bpd reported previously, per Reuters. "2023 world oil demand to rise by 2.7 million bpd, unchanged from the previous forecast," the forecasts add. The OPEC update also mentioned that the 2022 global economic growth forecast was lowered to 3.1% (prev. 3.5%), 2023 view was trimmed to 3.1% with significant downside risks prevailing.

On the other hand, the IEA said that it expects the global oil demand to rise by 2.1 million barrels per day in 2023 to surpass the pre-Covid levels at 101.8 million bps. “Demand growth is expected to slow from 5.1 mln bpd in 1Q22 to just 40,000 bpd by 4Q22,” adds IEA. The report also mentioned that the world oil supply hit a post-pandemic high of 100.5 million bpd in July.

Elsewhere, market sentiment remains mixed and joins the recent rebound in the oil prices to weigh on the black gold. While portraying the mood, Wall Street began the day on a positive side before closing mixed while the US 10-year Treasury yields rallied 10 basis points (bps) to 2.88% at the latest.

Behind the moves could be the comments from Minneapolis Fed President Neel Kashkari and Chicago Fed President Charles Evans challenged the market optimism earlier on Thursday. That said, Fed’s Kashkari mentioned that he hasn't "seen anything that changes" the need to raise the Fed's policy rate to 3.9% by year-end and 4.4% by the end of 2023. Further, Fed policymaker Evens stated, “The economy is almost surely a little more fragile, but would take something adverse to trigger a recession.” Fed’s Evans also called inflation "unacceptably" high.

On the same line were the headlines surrounding China. Reuters relied on sources to mention that the saying US President Biden rethinks steps on China tariffs in wake of Taiwan response. Additionally, a jump in the coronavirus cases from China, to 700 new confirmed cases in the mainland on August 10 versus 444 a day earlier, also weighs on the pair. Furthermore, Taiwan’s criticism of the “One China” policy and US House Speaker Nancy Pelosi’s support for Taipei also challenged the market optimism.

It’s worth noting that the softer prints of the US Jobless Claims and Producer Price Index (PPI) for July underpinned the risk-on mood and restricted the black gold’s downside.

Moving on, a light calendar at home requires the WTI crude oil traders to keep their eyes on the qualitative catalysts for fresh directions ahead of the US Michigan Consumer Sentiment Index (CSI) for August, expected at 52.5 versus 51.5 prior.

Also read: Michigan Consumer Sentiment Index Preview: Good news for the dollar but not for households

Technical analysis

A two-month-old descending resistance line precedes the 21-DMA to restrict immediate WTI rebound near $93.40 and $94.15 levels in that order. Given the recently firmer MACD, coupled with the gradual rebound from the yearly low, the commodity buyers are likely to keep reins.