WTI steadies around $103.00 as growth worries in China offset Europe’s embargo concerns

• Renewed demand worries in China due to the resurgence of Covid-19 in Beijing have barricaded oil prices.
• The impact of expectations of an embargo on Russian oil by Europe is fading away.
• Fed’s interest rate hike could also tighten the demand for oil in the US.

West Texas Intermediate (WTI), futures on NYMEX, are hovering around $103.00 as renewed fears of demand worries in China amid tight restrictions due to the resurgence of the Covid-19 in Beijing has dented oil prices.

Oil was boiling last week after Germany withdrew its opposition to an embargo on oil imports from Russia. Germany’s support for the decision of Russian oil prohibition bolstered the supply worries in Europe as the latter has significant dependence on Moscow for its oil requirements.

The epidemic of the Covid-19 in China has forced the Chinese administration to bank upon a zero Covid policy and to justify the same the administration has levied curbs on the movement of men, materials, and machines. Price rise due to the impact of supply worries in Europe is offset by the demand worries in China, which has barricaded oil prices in a tight range.

It would be justified to claim that a firmer US dollar index (DXY) has also restricted the upside in oil prices. The DXY is eyeing to reclaim its 19-year high at 103.93 amid the negative market sentiment. Uncertainty ahead of the interest rate decision by the Federal Reserve (Fed) has underpinned the risk-off impulse and has eventually improved the appeal for the greenback. The Fed is expected to elevate the interest rates by 50 basis points (bps). Also, the dictation over balance sheet reduction and hawkish guidance looks certain.