WTI balances below $110.00 on quiet global PMI performance, demand worries renew

• Oil prices are trading directionless as an underperformance from Global PMI numbers renews demand worries.
• The US PMI remained in line with estimates while Europe and the UK PMI displayed subdued performance.
• Re-opening of Shanghai after severe lockdown measures will spurt the oil demand.

West Texas Intermediate, futures on NYMEX, is oscillating in a narrow range of $109.00-109.72 in the Asian session after an unexpected jump in oil inventories reported by the American Petroleum Institute (API). The weekly oil stockpiles rose to 0.567 million barrels against the previous figure of -2.445 million barrels.

A general underperformance reported in the global Purchase Managers Index (PMI) economic data by various nations has raised concerns over the demand of oil on a broad basis. The US Manufacturing PMI remained similar to consensus at 57.5 but lower than the previous release. Europe’s Manufacturing PMI landed lower at 54.4 than estimates and prior print. Also, the UK’s Manufacturing PMI remained lower at 54.6 than forecasts and former figures. Therefore, a general underperformance in the economic activities by developed nations has showcased a plunge in the aggregate demand and henceforth the demand for fossil fuels.

Going forward, oil bulls may get a sigh of relief as Shanghai is reopening after two-month severe lockdown restrictions to contain the spread of Covid-19. It is worth noting that China is the leading importer of oil and the reopening of Shanghai may spurt the oil demand going forward. Apart from that, the upcoming US summer season is expected to increase the demand of fossil fuels.

Meanwhile, Europe has not reached any meaningful decision regarding the embargo on Russian oil imports as Hungary is continuously opposing the sudden Russian oil ban to safeguard itself against the prompt supply shock.