WTI oscillates below $114.00 as central banks bound for a rate hike announcement

• Oil prices may slip further on expectations of liquidity shrinkage from the world economy.
• Europe’s embargo on oil from Russia failed to keep the oil bulls strengthened.
• The majority of the central banks may elevate their interest rates by 50 bps.

West Texas Intermediate (WTI), futures on NYMEX, is oscillating in a narrow range of $113.42-114.27 in the early European session. The black gold witnessed a steep fall on Tuesday after failing to sustain above a two-month high at $118.62. A sheer downside move has been recorded in the oil prices despite the renewed supply concerns.

The announcements in the European Union (EU) Leaders Summit held on Tuesday inculcated an embargo on 90% of the oil imports from Russia. The EU considered the opposition from Hungary and exempted the latter amid its significant dependency on their pipeline imports. Prohibition of a huge amount of oil will impact vigorously the already tight oil market.  Despite the galloping supply concerns, oil prices tumbled strongly.

Investors should be aware of the fact that the majority of the giant central banks are going to step up their interest rates in June. Starring from the Federal Reserve (Fed) to the Bank of Canada (BOC), Bank of England (BOE), and European Central Bank (ECB) to Asia Pacific’s Reserve Bank of Australia (RBA), every central bank is expected to announce an interest rate hike by 50 basis points (bps).

The deployment of extreme quantitative measures will squeeze liquidity from the market, which will decline the volume of economic activities and the requirement of oil by the corporate.