WTI appears supported above $100.00 on easing supply concerns
- WTI has plunged almost 18% in the last three trading sessions on easing supply concerns.
- The spare capacity of the OPEC cartel will be utilized to offset the supply deviation post ban on Russian oil.
- Europe’s heavy dependency on Russian oil may restrict it from banning the latter soon.
West Texas Intermediate (WTI), futures on NYMEX, having attracted some significant offers near $126.51 on Tuesday, has been plunging continuously on easing supply fears after the OPEC allies’ thumbs up to the urge of increasing supply.
Oil prices fell like there is no tomorrow after hitting multi-year highs at $126.51.The black gold has plunged almost 18% in the last three trading sessions. Investors dumped the black gold after the US urged the oil producers to increase their production. In response to that, the OPEC member UAE favored to pump more oil to fix the galloping deviation in the demand-supply mechanism.
"We favor production increases and will be encouraging OPEC to consider higher production levels," tweeted by the UAE Embassy in Washington.
A few members of the OPEC allies have spare capacity to provide higher supply. Should this occur, the ban on the Russian oil supply will be fixed to some extent?
It is worth noting that the US addresses 8% of its oil requirements from Moscow while Europe derives 25% of its oil demand from Russia. Therefore, banning Russian oil overnight is not a cakewalk for the Eurozone.
Prices of oil are likely to remain capped for a while as OPEC will try hard to push the supply. Meanwhile, the US dollar index has settled above 98.50 on elevated inflation levels in US, which may call for an aggressive interest rate hike by the Federal Reserve in the monetary policy meeting next week.
Author
Sagar Dua
FXStreet
Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.
