WTI holds in bullish territories despite lowered demand forecasts

• West Texas Intermediate (WTI) crude oil rose on Wednesday.
• International Energy Agency (IEA) lowered its 2022 demand forecast on weak demand from China.

Despite a big rise in US inventories, West Texas Intermediate oil extended recent gains as the expectations of global supply deficits climb. At the time of writing, WTI down 0.73% after falling from high of $104.27 to a low of $103.51/bbls.

International Energy Agency (IEA) lowered its 2022 demand forecast on weak demand from China amid Covid-19 lockdowns. In its monthly Oil Market Report, the IEA said Russian production and exports continue to fall following on its invasion of Ukraine. The agency said 0.7-million barrels per day of Russian production has been shut in so far this month and it expects that to rise to 1.5 million bpd by month's end as buyer become scarce.

Analysts at ANZ Bank explained that ''the International Energy Agency said OPEC+ members have only managed to provide 10% of their promised supply increases for March. The agency also warned Russian production could drop 1.5mb/d in April as the country’s barrels struggle to find buyers.''

''Russian President Vladimir Putin begged to differ, saying it will find new buyers for its energy exports. More than half of its Urals crude for April continued to flow to Europe, though the volume was much lower than usual as European refiners scale back purchases,'' analysts at ANZ Bank said.

Meanwhile, analysts at TD Securities are expecting supply risks to remain elevated as ''persistent underproduction from OPEC+ related to a decade of underinvestment, along with stretched global spare capacity and critically low inventories, provide little buffer for any further disruptions.''

''High food and energy prices may further lead to unrest across the globe, which could further disrupt production in line with historical precedents from the Arab Spring. In this context, we may look to re-engage topside.''