WTI extends recovery to near $79.00 despite an increment in US official oil stock data

• Oil price has scaled to near $79.00 as Goldman Sachs sees a potential recovery in China’s demand.
• An addition in oil inventory data against the consensus of a drawdown failed to impact the oil recovery.
• China’s Covid situation may find its peak sooner and will regain track of progress ahead.

West Texas Intermediate (WTI), futures on NYMEX, have extended its revival move above the crucial resistance of $78.50 in the early Tokyo session. The oil price sensed buying interest around $77.00 as supply worries due to a ban on oil sales from Russia to G7 countries and the European Union joined expectations of a recovery in demand projections in China due to reopening measures.

Oil supply is expected to remain a major concern as Russia is not intended to provide fossil fuels at reduced prices than prevailing in the market. No doubt, western countries are actively looking for alternatives to Russia to address their oil demand but their sheer dependence on Russian oil will keep them in short-term pain.

Meanwhile, the sheer pace of reopening measures in Beijing by the Chinese administration has created short-term havoc due to a solid spike in the number of infections, however, Covid-19 may find its peak and the economy will regain track of progress ahead.

A note from economists at Goldman Sachs dictated that "For oil prices, we remain constructive on oil prices in the near term given the potential for improving China demand, and lower supply growth from US shale due to discipline/tight service markets, and OPEC+ quota reduction,"

On Thursday, the oil price recovery after a temporary pain from an increment in oil inventories was reported by the United States Energy Information Administration (EIA) for the week ending December 23. The official US agency showed an addition in oil stockpiles by 0.718 million barrels while the street was expecting a drawdown of 1.52 million barrels.