WTI retreats from $92.40 but still inside the woods amid multiple downside catalysts

• WTI hovers around $96.00 after easing around 36% in the last six trading sessions.
• A resurgence of Covid-19 in China may weigh down the demand for oil.
• The upside in oil prices will remain capped on higher oil output from OPEC.

West Texas Intermediate (WTI), futures on NYMEX, has rebounded after hitting a low of $92.37 on Tuesday. The oil prices have attracted some significant bids despite the presence of multiple downside indicators.

The confirmation from the OPEC syndicate to add more oil to the global supply brought an intensified sell-off in the oil prices earlier. The OPEC cartel will use its unused capacity to fix the restricted exports of oil from the Russian economy. The US imposed sanctions on Russian oil after the galloping military activities from Russian rebels in Ukraine. While the other Western leaders chose to trim the dependency on Moscow’s oil gradually.

On the demand side, a resurgence of Covid-19 in China has raised questions over the demand for oil. China is one of the largest consumers of oil and a halt in its manufacturing activities amid the lockdown in Shenzhen and fear of its expansion to other cities may squeeze the demand going forward.

Pressure on the demand front and expansion on the supply front may bring a fresh downside impulsive wave in the oil counter.

Meanwhile, the US dollar index (DXY) is oscillating below 99.00 ahead of the interest rate decision from the Federal Reserve (Fed). It is worth noting that an aggressive interest rate from the Fed may squeeze liquidity in the market and the oil market may find lower demand, which may have a modest impact on the oil prices further.