WTI price breaks below the $72 mark, while checking global growth expectation

• OPEC’s stance will be important to watch, as the oil prices are below the expected $80 mark.
• SVB fallout dents the global growth outlook.
• Easing inflation is putting pressure on oil prices.

WTI is facing a corrective downfall, starting around the $81 mark, and is currently sitting just beneath the $72 mark. The receding expectation around a cumulative global growth story is denting the oil demand. Despite tighter oil supply from the Organization of the Petroleum Exporting Countries (OPEC), WTI price struggles to remain elevated.

OPEC wants to keep oil prices above the $80 mark, therefore many voluntary cuts have been imposed, but the oil prices are keener to play the global growth weakening story instead of the law of supply and demand.

The global inflationary outlook, which is an important driving force behind commodities prices, is falling on the back of rising borrowing costs across the globe. The aforementioned effect has been seen in many commodities like Copper and Iron-ore.

The recent fallout of Silicon Valley Bank (SVB) and Signature Bank has dented investors’ sentiment around underlying financial conditions. If we add recent layoffs across many developed nations, it portrays a blurred picture of the global growth outlook. 

The recent data showed that the Chinese reopening story is not as optimistic as previously assumed. Given the fact that after the 2008 Great Financial Crisis (GFC), China was one of the countries that helped to rewrite the global growth story. But it’s not the case this time.

Meanwhile, on Tuesday, the US Consumer Price Index (CPI) was released in line with expectations, with the headline MoM figure coming in at 0.4% as expected, from the prior 0.5%, the YoY figure coming in at 6% in line with expectation, from prior 6.4%. The MoM core reading came in slightly higher at 0.5% vs. 0.4% expected, from the prior 0.4% and core YoY 5.5% in line with the expectation from the prior 5.6%.

In conclusion, the downside bias for WTI remains intact.

Levels to watch