WTI is pressured despite global supply crunch

• WTI bulls are pressured on bearish features in fundamentals. 
• However, both OPEC and the IEA have issued warnings that the global energy supply crunch is here to stay.

West Texas Intermediate (WTI) spot crude oil is on the bid on the day but is running into some supply during midday New York. The price is up 0.5% at $96.05 during the time of writing but has fallen from a high of $97.94 and ranged from $93.69 the day's low made in  Asia on recession worries.

The price was heavy to start the day despite an unexpectedly strong rise in US inventories. However, the US reported inflation continued to accelerate last month. The Consumer Price Index increased 1.3% last month as gasoline and food costs remained elevated, more than the 1.1% expected by economists polled by Reuters. This morning's number is very high and the dollar index reached 108.59, the best since Oct. 2002, from around 107.9 before the data was released. 

Meanwhile, in futures, WTI crude oil for August delivery ended up US$0.46 to settle at US$96.30 per barrel, while September Brent crude, the global benchmark, was last seen up US$0.11 to US$99.60. This outcome follows the plunge to the lowest since April that was made the prior day despite tight supplies on worries rising interest rates will lead to a demand-destroying recession.

Additionally, China's fresh lockdowns due to the tests for the Covid-19 omicron variant in the city, with CNN reporting most of the city of 25 million will be subjected to a new round of testing, is adding to the concerns and is a weight on oil prices. This comes following a two-month lockdown of Shanghai in early June, which cut oil demand by more than one million barrels per day,

Elsewhere, bearish data came from the International Energy Agency that said oil production rose by 690,000 barrels per day last month on higher output from the United States and Russia as it cut its forecast for 2022 oil demand to a rise of 1.7-million barrels per day from its June forecast that expected a 1.8-million barrel increase.

The agency stated that "a worsening macroeconomic outlook and fears of a recession are weighing on market sentiment, while there are ongoing risks on the supply side. For now, weaker-than-expected oil demand growth in advanced economies and resilient Russian supply has loosened headline balances."

In other data, in the agency's weekly inventory survey, showed a rise in stocks last week of 3.3-million barrels, while the consensus analyst estimate predicted a drop of 1.93-million barrels. Also, product inventories rose, with gasoline up 5.8-million barrels and distillates rising by 2.7-million barrels.

Furthermore, both OPEC and the IEA have issued warnings that the global energy supply crunch is here to stay and could still get worse. ''These latest warnings are in line with our view that energy supply risks will continue to rise, and remain the most prominent factor driving energy markets,'' analysts at TD Securities said. They also noted that considering that little progress has been made towards solving structural supply challenges, US President Biden's meetings with Saudi Arabia will garner plenty of attention.