Chicago WTI crude futures price is up 1.44% at $103.52 per barrel.
Oil prices rebounded on Wednesday after sharp losses on Tuesday as concerns about supply tightness from Russia and Libya arises. Libya recently closed its largest oil field as turmoil in the country intensifies.
Both benchmarks – WTI crude oil and Brent crude oil fell around 5% on Tuesday as the International Monetary Fund (IMF) slashed its global growth forecast citing the economic impact of the Russian invasion of Ukraine and soaring inflationary pressure. For the calendar year 2022, it cuts its global forecast from 4.4% to 3.6%, a reduction of nearly a full percentage point.
Global energy prices, including oil, have risen significantly this year as Russia, the world’s second-largest oil exporter faced sanctions for its invasion of Ukraine. Meanwhile, the OPEC + member countries are not able to meet its targeted production cap. Also, the potential of the EU banning Russian energy exports will weigh on the future of oil prices.
However, a weak global economic outlook and ensuing COVID – induced lockdowns will hurt the demand for oil and affect oil prices. Lockdown in China, the top global oil importer will reduce oil demand and prices.
Overall, the price of oil is expected to rise on potential supply tightness. OPEC+ countries and Russia, which account for more than half of the global oil supply are witnessing decreasing production. In March, the OPEC+ members produced 1.45 million barrels per day (bpd) below targets, while Russia produced 300,000 barrels per day (bpd) below its target. Meanwhile, in the United States, the Strategic Petroleum Reserve (SPR) fell by 4.5 million barrels last week against an expectation of increasing inventories.
On the technical side, the RSI of Chicago WTI crude oil futures stood at 51.08 and is currently trading above MA (50) but below MA (5) and MA (20). If the price rises further, BUY position can be taken with the following target and stop-loss:
