- WTI retreats from a fresh YTD peak touched on Tuesday, though the downside seems limited.
- The prospects of rising supply from Russia prompt some profit-taking after the recent run-up.
- Concerns about tightening global supply should act as a tailwind and help limit deeper losses.
West Texas Intermediate (WTI) US Crude Oil prices edge lower during the Asian session on Tuesday and revers a part of the previous day’s strong gains to the $82.45 area, or the highest level since early November. The commodity currently trades around the $82.00/barrel mark, though the downside seems limited in the wake of worries about tightening supply.
Ukrainian drone strikes on Russian oil refineries over the last week could lead to higher crude oil exports from Russia. This, in turn, prompts bullish traders to take some profits off the table after the recent strong run-up witnessed over the past week or so and slightly overstretched conditions on short-term charts. Apart from this, sustained US Dollar (USD) buying, bolstered by bets that the Federal Reserve (Fed) will stick to its higher-for-longer interest rates narrative to bring down inflation, exerts downward pressure on the commodity.
Furthermore, growing concerns about a global economic slowdown, which could dent fuel demand, turn out to be another factor weighing on Crude Oil prices. Meanwhile, lower crude exports from Saudi Arabia and Iraq, along with disruptions caused by Houthi attacks in the Red Sea, could act as a tailwind for the black liquid and help limit the corrective slide. Hence, it will be prudent to wait for strong follow-through selling before confirming that the commodity has topped out in the near term and positioning for deeper losses.
