- 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.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD: The hunt for the 0.7000 hurdle
AUD/USD quickly left behind Wednesday’s strong pullback and rose markedly past the 0.6900 barrier on Thursday, boosted by news of fresh stimulus in China as well as renewed weakness in the US Dollar.
EUR/USD refocuses its attention to 1.1200 and above
Rising appetite for the risk-associated assets, the offered stance in the Greenback and Chinese stimulus all contributed to the resurgence of the upside momentum in EUR/USD, which managed to retest the 1.1190 zone on Thursday.
Gold holding at higher ground at around $2,670
Gold breaks to new high of $2,673 on Thursday. Falling interest rates globally, intensifying geopolitical conflicts and heightened Fed easing bets are the main factors.
Bitcoin displays bullish signals amid supportive macroeconomic developments and growing institutional demand
Bitcoin (BTC) trades slightly up, around $64,000 on Thursday, following a rejection from the upper consolidation level of $64,700 the previous day. BTC’s price has been consolidating between $62,000 and $64,700 for the past week.
RBA widely expected to keep key interest rate unchanged amid persisting price pressures
The Reserve Bank of Australia is likely to continue bucking the trend adopted by major central banks of the dovish policy pivot, opting to maintain the policy for the seventh consecutive meeting on Tuesday.
Five best Forex brokers in 2024
VERIFIED Choosing the best Forex broker in 2024 requires careful consideration of certain essential factors. With the wide array of options available, it is crucial to find a broker that aligns with your trading style, experience level, and financial goals.