WTI steadies around $119.00 despite renewed lockdown fears in China

• Oil prices have been less impacted due to renewed lockdown worries in China.
• The oil shortage due to the ban on Russian oil imports won’t get offset sooner.
• The rising demand for gasoline in the US economy in peak summers will strengthen the oil bulls further.

West Texas Intermediate (WTI), futures on NYMEX, is holding itself above $119.00 and has faced a minor time correction after a vertical upside move. The black gold is holding its gains despite the renewed fears of a lockdown in China to contain the spread of the Covid-19.

The Chinese economy was recovering from lockdown measures in Shanghai and Beijing after a two-month lockdown period. Restrictions on the execution of various economic activities were getting the traction again, however, the discovery of fresh Covid-19 cases has raised questions over the zero Covid-19 policy of China.

No doubt, the restrictive measures in the Chinese economy will trim the demand forecasts but the broader upside in the oil prices will remain intact. The oil shortage due to the embargo on oil imports from Russia won’t get offset sooner. Investors have started considering the fact that the imbalance in the demand-supply mechanism after a prohibition of oil from Moscow will persist longer.

The restrictions on oil imports from Russia have forced many refineries worldwide to shut down their operations after its invasion of Ukraine. Availability of less capacity due to less number of operating refineries will keep the oil bulls' momentum intact. The oil prices are set to recapture their all-time-high levels at $126.35.

Meanwhile, the rising demand for crude oil to manufacture gasoline due to peak summer in the US economy will keep the requirement for oil at elevated levels.