WTI establishes above $120.00 despite higher EIA oil stockpiles

• The black gold has extended its gains and has climbed above $120.00 firmly.
• A shortage of oil due to the prohibition of oil imports from Russia won’t be offset easily.
• EIA has reported higher stockpiles at 2.025 million barrels.

West Texas Intermediate (WTI), futures on NYMEX, has climbed above the psychological resistance of $120.00 and is establishing above the same on escalating supply concerns. The black gold is experiencing a sheer upside momentum after overstepping March 24 high at $115.64.

The OPEC+ promise of pumping more oil has failed to support the oil bears. Oil prices are aiming higher as the think tank in the investing community believes that the promised additional output by the oil cartel won’t offset the amount of oil used to be exported by Russia. Prohibition of oil from Moscow by the Western leaders has not come with the tag of alternative suppliers. Therefore, supply constraints will continue to persist and oil prices will continue to rise. Investors should note that OPEC+ has promised to infuse 648k barrels of oil in July and August into the global oil supply.

Meanwhile, oil stockpiles by the Energy Information Administration (EIA) rose unexpectedly on Wednesday by 2.025 million barrels, much higher than the estimates and the prior print of -1.917 million barrels and -5.068 million barrels respectively.

It is worth noting that higher interest rates in the US economy are hoping for shrinkage in the Gross Domestic Product (GDP) numbers. Therefore, a lower requirement of oil for catering to economic activities will keep the oil stockpiles higher. The dollar-sensitive oil is going to be impacted after the release of the US inflation on Friday. A higher-than-expected inflation print will bolster the odds of a rate hike by the Federal Reserve (Fed) next week.