- WTI hits December 2022 lows around $66 amid Credit Suisse crisis, causing a shift in global financial conditions.
- Investors fading optimism for 2023 growth outlook drives Oil prices lower.
- IEA reports a drop in Russian Oil exports and an increased global oil stockpile.
West Texas Intermediate (WTI) prices hit lows not seen since December 2022, with the three-day sharp decline finding its floor around the $66 mark. Short-term relief arrived on Thursday after a backup plan was introduced for Credit Suisse's worsening financial conditions. Following Silicon Valley Bank's (SVB) fallout, Credit Suisse was next in line to address its troublesome liquidity issue, causing its shares to plunge heavily.
The WTI price dropped earlier this week due to sudden shifts in global financial conditions, led by historically high borrowing costs. As investors' optimistic growth outlook for 2023 fades, falling oil prices are inevitable.
With a diminishing global growth outlook, investors are abating risk assets like oil and equity complexes, and are rushing to purchase bonds in a risk-averse environment.
The International Energy Agency (IEA) published comments on Wednesday stating that Russian oil exports fell by more than 500k bpd in February. The global oil stockpile has risen to around 7.8 billion barrels, the highest level since September 2021, indicating a slower pace of oil consumption. Despite a pessimistic global growth outlook, the IEA has raised its global oil demand forecast for 2023 from 100 million bpd to 102 Mbpd.
In the medium to short term, WTI prices are likely to be driven by risk sentiment, with the downside bias remaining intact.
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