Energy Preview: WTI Crude Sees Good Recovery After Recent Correction

21 Mar 2022 , 12:35 AM

WTI Crude oil futures bounced from recent lows and moved well above $100 per barrel. The counter closed around $103 per barrel as the Russia-Ukraine war continued to dominate sentiments. MCX Crude oil futures closed at Rs 7855 per barrel, up 1.85% on the day in last session. The International Energy Agency (IEA) noted in a latest monthly update that surging commodity prices and international sanctions levied against Russia following its invasion of Ukraine are expected to appreciably depress global economic growth. As a result, it revised down forecast for world oil demand by 1.3 mb/d for 2Q22-4Q22, resulting in 950 kb/d slower growth for 2022 on average. Total demand is now projected at 99.7 mb/d in 2022, an increase of 2.1 mb/d from 2021. This marks a downgrade of around 1 mb/d from its previous forecast. The prospect of large-scale disruptions to Russian oil production is threatening to create a global oil supply shock. IEA estimates that from April, 3 mb/d of Russian oil output could be shut in as sanctions take hold and buyers shun exports. OPEC+ is, for now, sticking to its agreement to increase supply by modest monthly amounts. Only Saudi Arabia and the UAE hold substantial spare capacity that could immediately help to offset a Russian shortfall.

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