- WTI draws support from concerns about tightening global supply, though the upside remains capped.
- Investors seem worried that rising interest rates will hamper economic activity and dent fuel demand.
- Receding fears over potential supply disruptions due to the Israel-Gaza conflict acts as a headwind.
West Texas Intermediary (WTI) Crude Oil prices struggle to gain any meaningful traction on Friday and oscillate in a narrow band, around mid-$82.00s through the Asian session. The commodity, meanwhile, manages to hold above the weekly low touched on Thursday and draw support from supply concerns in an already tight market.
The US toughened its stance against Russia and imposed sanctions on two shipping companies for carrying Russian Oil bought at a price greater than the $60/barrel price cap imposed by G7 countries last year. The tighter US scrutiny of exports from Russia – the world's second-largest oil producer – could curtail supply. This, along with a forecast that global inventories will decline through the fourth quarter, continues to lend some support to Crude Oil prices.
Furthermore, OPEC kept its forecast for growth in global oil demand, citing signs of a resilient world economy so far this year, and expected further demand recovery in China – the world's biggest Ol importer. Adding to this, the International Energy Agency (IEA), in its monthly oil market report, raised the global Oil demand growth forecast for 2023 to 2.3 million bpd from 2.2 million bpd previous, though downgraded it for the next year to 880K bpd from 1 million bpd.
The US CPI report released on Thursday, meanwhile, revived bets for at least one more rate hike by the Federal Reserve (Fed) in 2023 and triggered a sharp rise in the US Treasury bond yields. This raises concerns about economic headwind stemming from rapidly rising borrowing costs, which is expected to dent fuel demand. Apart from this, receding fears about potential supply disruptions due to the Israel-Palestinian conflict should cap the upside for Crude Oil prices.
Technical levels to watch
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
EUR/USD treads water just above 1.0400 post-US data
Another sign of the good health of the US economy came in response to firm flash US Manufacturing and Services PMIs, which in turn reinforced further the already strong performance of the US Dollar, relegating EUR/USD to the 1.0400 neighbourhood on Friday.
GBP/USD remains depressed near 1.2520 on stronger Dollar
Poor results from the UK docket kept the British pound on the back foot on Thursday, hovering around the low-1.2500s in a context of generalized weakness in the risk-linked galaxy vs. another outstanding day in the Greenback.
Gold keeps the bid bias unchanged near $2,700
Persistent safe haven demand continues to prop up the march north in Gold prices so far on Friday, hitting new two-week tops past the key $2,700 mark per troy ounce despite extra strength in the Greenback and mixed US yields.
Geopolitics back on the radar
Rising tensions between Russia and Ukraine caused renewed unease in the markets this week. Putin signed an amendment to Russian nuclear doctrine, which allows Russia to use nuclear weapons for retaliating against strikes carried out with conventional weapons.
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.