WTI consolidates in $85.00s post-bearish inventory data but geopolitics, supply fears keep crude underpinned

• WTI is trading in the mid-$85.00s after bearish inventory data knocked it back from highs.
• But for now, geopolitics, supply fears and expectations for continued robust demand will likely keep prices underpinned.

Front-month WTI futures have spent Thursday’s session consolidating in the $85.00s amid a lack of fresh catalysts to drive the price action either way. At current levels near $85.50, WTI trades slightly more than 50 cents lower on the session. Indeed, crude oil markets appeared to experience selling pressure ahead of the Wednesday futures market close at 2200GMT before gapping lower at the Thursday futures market reopen at 2300GMT as a result of bearish inventory figures. At current levels, WTI is about $2.0 below Wednesday’s highs.

According to the latest weekly private US inventory report from API, crude oil stocks rose by 1.4M barrels last week versus consensus expectations for a 0.9M barrel decline. Gasoline stocks, meanwhile, rose by 3.5M barrels whilst distillate stocks fell by 1.2M barrels. If official data released by the US EIA at 1530GMT confirm Wednesday’s API figures, that would mark the first rise in crude oil stocks in seven weeks. This could further weigh on prices and technicians would be keenly watching how WTI responds to support in the $85.00 area.

In terms of the major themes driving crude oil markets right now, amid consensus expectations for robust demand this year, supply-side themes are currently getting more attention. Chief amongst them is OPEC+’s ongoing struggles to lift output in line with recent output quota hikes. On Wednesday, the IEA said the producer group produced 800K barrels per day less than its production target in December and the recent outage of an Iraqi-Turkish pipeline and attack on UAE infrastructure highlighted the risk of continued underproduction.

Meanwhile, with Russia seemingly on the verge of a military incursion into Ukraine, there is uncertainty about what kind of sanctions the world’s third-largest crude oil producer may face and whether this might affect their oil exports. For now, geopolitics, supply fears, and expectations for continued robust demand will likely keep prices underpinned and analysts will likely continue to call for $100 per barrel oil this year.