A Little Higher In Asia; Growth Worry Takes Focus Over Crude Supply Woes

WTI and Brent are $1.20 firmer apiece at typing, operating a touch above Tuesday’s troughs as debate re: the impact of lower global economic growth on energy demand does the rounds in Asia.

• To recap, both benchmarks shed between $5.50 to $6.00 on Tuesday as worry re: demand destruction arising from lower economic growth in ‘22 helped ease lingering crude supply constraint fears from extremes seen earlier in the year.
• On that topic, the International Monetary Fund (IMF) slashed global economic growth forecasts for ‘22 by 0.8% on Tuesday (4.4% to 3.6%), compounding growth fears (keeping in mind continued worry surrounding the COVID outbreak in China) after the World Bank’s 0.9% downgrade on Monday (4.1% to 3.2%), with both organisations citing Russia’s invasion of Ukraine as a primary driver of the downgrade.
• Elsewhere, RTRS source reports pointed to OPEC+ producing 1.45mn bpd below production targets in March, with Russian crude output reportedly falling 300k bpd short of target, suggesting that well-documented worry re: buyer self-sanctioning and sanctions may be taking effect.
• Turning to the U.S., the latest round of API inventory estimates crossed late on Tuesday, with reports pointing to a surprise drawdown in crude inventories, unwinding some of the build reported last week. An increase in gasoline and Cushing stocks was reported as well, while a drawdown was observed in distillate stockpiles.
• EIA data is due later on Wednesday (1430 GMT), with WSJ estimates calling for a build in U.S. crude inventories, while drawdowns are expected to be seen in gasoline and distillate stockpiles.