WTI finds a solid bottom above $100

• WTI has stabilized in a narrow range of $102-$106 and currently trades at 103.00 and is trading almost flat.
• WTI has once again found a decent bottom above $100 after a roller coaster week as traders ponder supply risk from Russia.
• More evidence that OPEC+ is short of its production quotas (in February) is contributing to fears of a near-term shortage.

WTI futures of the month Earlier oil prices have stabilized in a range of $102-$106 a barrel on Friday amid a relatively quiet end to what has been a rollercoaster week. Prices slumped to $93.00 from near $110 amid China lockdown fears as the country’s zero-Covid approach struggles to contain Omicron, but has since regained solid footing above $100 amid ongoing concerns about crude oil shortages as a result of Western sanctions on the Russian economy. The momentum toward a new nuclear deal between the major Western powers and Iran also appears to have ebbed somewhat.

Currently trading at $103.00, WTI is trading sideways on the day, but remains on track for a weekly drop of over $5.0, which would mark a second consecutive weekly loss. While prices remain substantially lower compared to last week’s highs in the $130 area, WTI is currently still trading with a gain of over $11.00 since the Russian invasion of Ukraine. In the absence of an announcement of a peace deal between Russia and Ukraine, which still appears to be some way off, analysts suspect that the risks for oil remain tilted to the upside.

According to a Reuters report on Friday, OPEC+ continued to exceed its production quota in February and by an even larger margin than in January. Meanwhile, the main OPEC nations with space capabilities (Saudi Arabia and the United Arab Emirates) have shown no signs this week of giving in to pressure from major oil importers (such as the US) to increase production to a faster pace, despite the fact that, according to the International Energy Agency, oil markets could lose up to 3 million barrels per day in supply from Russia starting in April. All signs point to WTI continuing to trade at elevated levels for the foreseeable future as supply adjusts upward from non-Russian sources, which will take time.

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