WTI recovers to near $80.00 after a mild correction as supply worries escalate

• Oil prices have sensed fresh demand after a marginal correction to near $79.50.
• The US Dollar index is trading sideways below 104.00 amid the unavailability of potential triggers.
• Russia’s ban on oil supply to G7 and the European Union, and a higher revision for China’s GDP have supported oil prices.

West Texas Intermediate (WTI), futures on NYMEX, have resumed their upside journey after correcting to near $79.50 in the late New York session. The oil price has attempted a rebound as supply worries have deepened further after Russian President Vladimir Putin decided to ban the supply of oil to G7 countries and the European Union by levying a price cap.

Black gold is also hogging the limelight amid lackluster performance by the US Dollar Index (DXY). Despite sheer volatility in the United States equities, the USD index is trading sideways below 104.00 amid the unavailability of potential triggers.

Earlier G7 countries and the European Union levied a price cap on Russian oil at $60.00 to restrict it from funding arms and ammunition for war against Ukraine. In retaliation, President Vladimir Putin signed a decree that bans the sale of Russian oil to countries that imposed the oil price cap. It will run from February 1 to July 1.

Apart from the supply worries, the action moves from China for reopening the economy after a prolonged lockdown have also infused fresh blood into the oil bulls. Despite a spike in Covid-19 cases, the Chinese administration has dismantled quarantine rules for inbound travelers, which is going to ease supply chain disruptions. A major step towards reopening of the economy to regain the path of progress is supporting the oil price.

A fresh campaign of scrapping restrictions on Covid-related measures in China has resulted in the revision of the Gross Domestic Product (GDP) forecast.  In a statement released by China’s National Bureau of Statistics (NBS), the agency said that they have revised the country’s estimate of 2023 GDP growth to 8.4% from 8.1% previously.