WTI’S comeback closes chart gap as EIA slammed by OPEC

WTI crude oil is up by some 0.6% and has traveled within a range of between $75.24 and $74.08 so far. Following two days of losses that cut prices to the lowest since late March, the black gold is back on the mend in a mini short squeeze.

WTI has closed the gap that was put on the charts after OPEC+’s surprise 1.1-million barrel per day production cut. However, demand fears played in on Thursday after the United States reported its first-quarter Gross Domestic Product rose less than expected.

Real Gross Domestic Product advanced at a slower 1.1% QoQ AR clip in the first quarter with activity posting its first below-trend expansion since the second quarter of 2022. Qi growth fell below consensus expectations at 1.9%, but it was largely in line with our 1.2% forecast. Under a context of rising uncertainty.

Analysts continue to look for activity to advance at a below-trend pace through the end of the year, with a recession likely starting in Q4 2023. Strong consumer-price data continue to underscore the stickiness of underlying inflation.

Nevertheless, the weak economic data continues to raise demand concerns and a recession in the United States could spark demand worries in other OECD nations.

Meanwhile, the OPEC+ cuts will take effect on May 1. Today OPEC Secretary-General Haitham al-Ghais said the group was not looking to manage prices but is focusing on market fundamentals, according to reports.

In response to the IEA’s warning made on Wednesday that OPEC should be careful not to cut too much production lest they jack up prices too high, the Organization of the Petroleum Exporting Countries (OPEC) issued a warning of its own to the IEA: your calls to stop investing in oil and gas is what could lead to future price volatility, OPEC said in a Thursday statement.

The IEA’s warning was simple: OPEC should be careful not to cut production too much, lest crude oil prices rise to the point where it stifles economic growth and pressures consumers into moving away from costly fossil fuels to renewable energy and EVs.

“The global economy is in a very fragile stage,” Birol said on Wednesday, adding that higher oil prices were “the last thing that we want.” Meanwhile, the IEA has spent the last few years becoming an unofficial champion of the energy transition movement.

OPEC declined to take the warning in stride, lashing out at the IEA with a press statement, arguing that “finger pointing and misrepresenting OPEC and OPEC+ actions is counterproductive,” stressing that blaming oil for inflation was erroneous and technically incorrect.