WTI extends its consolidation towards $118.00, oil stockpiles advance unexpectedly

• Oil prices are trading back and forth around $118.00 as investors await a fresh trigger.
• Advancing odds of a demand recovery in China will keep bulls in the driving seat.
• The promise of pumping more oil by the OPEC+ is unable to offset the oil exports from Russia.

West Texas Intermediate (WTI), futures on NYMEX, has stretched its consolidation amid the unavailability of any potential trigger that could dictate direction to the oil investors. The oil prices have turned sideways towards $118.00 and are eyeing a potential catalyst as supply concerns are expected to drive the asset northwards.

Oil prices have witnessed a strong upside on expectations of a demand recovery in China. The Chinese administration has withdrawn lockdown curbs imposed on Shanghai and Beijing to contain the spread of the Covid-19. This has resumed the regular usage of oil for transportation and economic activities, which will restore the former demand grades going forward.

On the supply front, the American Petroleum Institute (API) has reported an unexpected increase in the oil stockpiles by 1.845 million barrels. However, it will have a minimal impact on the oil prices as supply concerns are galloping on a broader note. The OPEC+ has promised to pump more oil into the global supply to neutralize the shortage of oil supply due to the prohibition of oil imports from Russia by various Western leaders.

Considering the bulk oil exports from Russia and the promise of adding 648,000 barrels of oil by the OPEC+, the oil cartel is unable to fix the oil shortage. Also, the market participants cannot rely on additional oil promises from the OPEC+ as a majority of the oil-producing countries are operating at full capacity, which leaves less room for more oil production.