WTI remains sideways around $84.00, downside seems favored on hawkish Fed bets

• Oil prices oscillate around $84.00 as the focus shifts to the Fed monetary policy meeting.
• Rate hikes by G-7 central banks will cut the growth forecasts.
• OPEC+ production targets have been trimmed by 3.58 million barrels per day.

West Texas Intermediate (WTI), futures on NYMEX, are displaying a lackluster performance in the early European session. The oil prices are witnessing back-and-forth moves in a narrow range of $82.90-83.40 as investors are looking to create positions after the announcement of the interest rate decision by the Federal Reserve (Fed). The positions on oil prices would be more decisive post the Fed monetary policy meeting.

The black gold is facing severe pressure this week as central banks from the G-7 group are preparing for a fresh rate hike cycle. The central banks are forced to tighten their policies further as price pressures have not responded well to the pace adopted by them. No doubt, the rate hike announcements will also stem a gloomy outlook for the growth rate. The concept of squeezing liquidity from the market has forced the corporate to postpone their expansion plans and invest majorly in ultra-filtered investment opportunities only.

The mighty US dollar index (DXY) is aiming higher as the Fed will step up its interest rates at least by 75 basis points (bps). This will bring a sheer decline in liquidity as private players will dodge fetching money at 3-3.25% interest rates. It will trim the prospects for growth rates and eventually a decline in the oil demand vigorously.

Meanwhile, a decline in oil supplies by OPEC+ seems unable to provide a cushion on the downside. The OPEC+ production targets are shortened by 3.58 million barrels per day, which carries 3.5% of global demand. However, investors are focusing entirely on demand catalysts.