WTI steadies around $95.00, sees more pain amid oil supply fix and Covid-19 cases in China

West Texas Intermediate (WTI), futures on NYMEX, is oscillating around $95.00 but is likely to bear more pain amid a promise of higher oil supply by the OPEC cartel and rising Covid-19 cases in China.

The promise of pumping more oil from the OPEC cartel in response to the urge from US President Joe Biden to fix the deviation in the demand-supply mechanism has brought a sell-off in the oil prices. The urge from the latter came after the US imposed sanctions on Russia. Moscow’s invasion of Ukraine forced the US to restrict the oil supply from Russia while the other Western leaders chose to reduce dependency on the Russian oil imports gradually.  This has corrected the oil prices significantly after a swift move towards March 8 high at $126.51.

Meanwhile, the rising cases of Covid-19 in China have forced the Chinese administration to restrict the movement of men, materials, and machines. A lockdown has been announced in Shenzhen city to contain the epidemic of Covid-19. The restriction may pressure the imports of oil in China. It is worth noting that China is one of the largest oil importers of the world and a cut on its oil imports is more likely to drag the oil prices lower.

On the dollar front, the US dollar index (DXY) is slipped marginally below 99.00 amid rising obscurity over the interest rate decision by the Federal Reserve (Fed). An interest rate hike by the Fed will squeeze liquidity injection into the economy, which may reduce manufacturing activities and eventually the consumption of oil.  Therefore, a confluence of multiple macro factors is hoping for further weakness in the oil prices.