WTI Beats USD 100.00 As IEA Restirs Supply Shortage Concerns

WTI crude has climbed near USD 102.00 as IEA renewed fears of supply shortage. The expectation of supply shortage from Russia has already been discounted by investors. The OPEC’s positive response to the urge of US President Joe Biden will fix the demand-supply gap.

West Texas Intermediate (WTI), futures on NYMEX, has rebounded sharply after hitting a low of USD 92.37 on Tuesday. The oil prices have increased around 9% overnight on renewed fears of supply worries due to sanctions on Russia by the Western leaders. Investors should be informed that the Russian economy attracted sanctions from the West on its invasion of Ukraine, three weeks back.

The International Energy Agency (IEA) said three million barrels per day (bpd) of Russian oil and products could be shut in from next month. That loss would be far greater than an expected drop in demand of one million bpd from higher fuel prices.

The headline faded the promise of the OPEC cartel, which responded positively to the urge of US President Joe Biden to pump more oil to fill the demand-supply gap. The statement by the IEA has impacted positively for the oil prices but investors must keep in mind that the previous rally in the oil prices was banked upon the expected shortage of supply from Russia.

Therefore, the impact is known to the market and the rebound in oil prices is mere a pullback and not a reversal. The Energy Information Administration (EIA) reported higher oil stockpiles on Wednesday. The oil stockpiles figure landed at 4.345M outperformed the preliminary estimate of -1.375M and the previous print of -1.863M.