WTI pressured in a risk-off setting in Tokyo

• Oil is under pressure in Tokyo as markets switch risk-off. 
• Energy demand growth is likely to remain positive on a year-on-year basis, analysts say. 

The price of oil is above water in Asia by some 0.15% at the time of writing but is coming under pressure in a risk-off start to the Tokyo session. WTI is trading at $96.26 between a low of $96.15 and $96.73 bbls so far.

the price has been attempting to recover from levels not seen since Russia’s invasion of Ukraine as high inflation sparks concerns of tighter monetary policy slowing economic growth, as analysts at ANZ Bank explained. ''Sentiment hasn’t been helped by renewed COVID-19 outbreaks in China, which threaten to halt the recovery in demand. High prices also appear to have blunted demand for gasoline in the US. Nevertheless, the recession narrative is likely to overwhelm the fundamental tightness in physical markets. Both OPEC and IEA warned this week that supply shortages are likely to remain amid robust demand.''

Meanwhile,  the talk of a global recession, which is as analysts at TD securities say, ''consistent with slowing demand growth'', could be overcooked in the price. ''Barring an extraordinarily hard-landing, energy demand growth is likely to remain positive on a year-on-year basis,'' the analysts argued.

''In line with this theme, our return decomposition framework highlights that markets continue to discount rising energy supply risks, shrugging off reports of a potentially very large increase in supply from Gulf nations. We don't fear a change in oil market trends, as little progress has been made towards solving structural supply challenges.''