WTI consolidates at $85.50 after disappointing inventory data

• WTI is trading at $85.50 after bearish inventory data pulled it back from highs.
• But for now, geopolitics, supply fears and expectations of continued strong demand are likely to keep prices underpinned.

WTI futures from the previous month they have spent the Thursday session consolidating at $85.50 amid a lack of new catalysts to fuel the price action in any way. It currently trades at $85.50, losing almost 50 cents on the session. Indeed, crude oil markets appeared to experience selling pressure ahead of Wednesday’s futures market close at 22:00 GMT before falling on Thursday’s futures market reopening at 23:00 GMT as a result of the bearish inventory figures. It lost $2.0 from Wednesday’s highs.

According to API’s latest weekly US private inventory report, crude oil stocks rose 1.4 million barrels last week versus consensus expectations for a 0.9 million barrel decline. Gasoline stocks, for their part, increased by 3.5 million barrels, while distillate stocks fell by 1.2 million barrels. If official data released by the US EIA at 15:30 GMT confirms Wednesday’s API figures, that would mark the first increase in crude oil stocks in seven weeks. This could further weigh on prices and technicians would be watching closely how WTI responds to support at the $85.00 zone.

In terms of the main themes driving crude oil markets right now, amid consensus expectations of strong demand this year, supply side themes are currently receiving more attention. Chief among them is OPEC+’s ongoing struggle to raise production in line with recent increases in production quotas. On Wednesday, the EIA said the producer group produced 800,000 barrels per day less than its production target in December and that the recent disruption of an Iraqi-Turkish oil pipeline and the attack on UAE infrastructure highlighted the risk of a continued underproduction.

Meanwhile, with Russia apparently on the verge of a military incursion into Ukraine, there is uncertainty about what kind of sanctions the world’s third-largest crude oil producer may face and whether this could affect its oil exports. For now, geopolitics, supply fears and expectations of continued strong demand will likely keep prices underpinned and analysts are likely to continue to call for $100 a barrel of oil this year.

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