WTI sees auction above $81.00 as Russia’s ban on crude sale triggers supply worries

• Oil price is likely to climb above $81.00 as China’s reopening measures secure firmer long-term demand.
• An announcement of an oil supply ban from Russia has triggered supply worries.
• The IMF sees the pain in CY2023 led by declining manufacturing activities in the United States, China, and Europe.

West Texas Intermediate (WTI), futures on NYMEX, settled the last trading session of CY2023 on a solid note. The oil prices climbed above $80.00 after sensing firmer demand on every dip, which bolstered the expression of more upside in the near future. The black gold is gaining attention as escalated supply worries led by the oil supply cease from Moscow have triggered the risk of equilibrium in the demand-supply mechanism ahead.

The threat of an oil supply ban from Russian President Vladimir Putin after an announcement of a price cap by G7 countries and the European Union triggered supply worries. Russian oil attracted a price cap as Western nations want less funding for augmenting the requirement of arms and ammunition to continue the war against Ukraine.

Also, optimism for oil demand in China is regaining track as a spike in Covid-19 cases is a short-term pain, which won’t sustain for a longer period. The Chinese administration is reopening the economy by dismantling lockdown measures at a sheer pace as it aims for a rebound in the extent of economic activities. The move is supporting upside bias for the oil price.

The latest commentary from International Monetary Fund (IMF) on global demand could pause oil’s upside journey. Managing Director Kristalina Georgieva of the IMF cited on the CBS Sunday morning news program that “For much of the global economy, 2023 is going to be a tough year as the main engines of global growth - the United States, Europe, and China – all may experience weakening activity,”.