WTI establishes above $105.00 as focus shifts to OPEC meet

• WTI has overstepped $105.00 after tumbling to near $100.00 as supply concerns loom.
• Lower US oil strategic reserves will upthrust the oil prices further.
• EU may exempt Hungary and Slovakia from the embargo due to their higher dependency on Russian oil.

West Texas Intermediate (WTI), futures on NYMEX, has climbed above $105.00 ahead of the OPEC meeting. The oil cartel is expected to keep the oil prices above $100.00, which may force them to squeeze the oil production in an already tight market. The tailwinds of supply concerns amid OPEC’s determination to keep oil prices above $100.00 and expectations of lower oil stockpiles are outperforming the headwinds of a plummet in oil demand of to the Covid-19 resurgence in Beijing, China.

The strategic reserves of oil in the US are expected to slump sharply as the US is becoming a net exporter of oil in fulfilling the thirst of Europe for oil and energy. Last month, the deviation between import and export of crude oil and fuel remained in favor of exports by three million barrels daily, as per Reuters. Falling oil strategic reserves of the US won’t fulfill the demand for oil by Europe going forward, as the latter is going to embargo Russian oil completely.

Meanwhile, Hungary and Slovakia, two members of the European Union (EU) are ready to veto the decision of prohibiting the oil imports from Russia amid their way higher dependency on oil from Russia. The EU may extend their timeframe for reducing their reliance on Russian oil or will consider exemptions for them.

On the demand front, tightening curbs in Beijing after Shanghai in China due to the resurgence of the Covid-19 has raised concerns for oil demand. A slump in demand by the world’s largest oil importers will have a serious impact on the oil prices.