WTI struggles around $100.00 on higher API oil inventories, upside story still solid

• The black gold is facing barricades at around $100.00 as API reported oil build-up.
• OPEC cartel has not promised more oil to cool-off volatility in the oil prices.
• Lockdown fears in China may bring a significant impact on oil prices.

West Texas Intermediate (WTI), futures on NYMEX, is struggling to overstep the psychological resistance of $100.00 in the Asian session. The black gold has observed mild selling pressure after the American Petroleum Institute (API) reported a build-up of oil inventories for the past week by 1.86 million barrels. Gasoline inventories rose by 1.29 million barrels, however, the distillate stocks fell by 2.1 million barrels.

On a broader note, the upside story remains solid as US President Joe Biden has failed to fetch the promise of more oil from the OPEC cartel. The US administration is committed to bringing price stability to oil prices. To fulfill the same, US President Joe Biden visited Saudi Arabia for bringing more oil supply to the table.  However, the unavailability of the promise of more oil during the visit has strengthened the oil bulls.

Considering the elevated oil prices, the major oil suppliers Saudi Arabia and the United Arab Emirates (UAE) seem not interested in injecting more oil into the global supply. The OPEC nations are operating near their full-capacity levels and are enjoying premium prices. Therefore, the nations have not shown any interest in adding capacity despite having the right infrastructure.

Other OPEC nations don’t have the ability to expand their capacity. Also, a few OPEC nations are unable to produce the stated oil. Prohibition of oil imports from Russia by the Western leaders will keep haunting the oil bulls for a prolonged period.

No doubt, the escalating odds of lockdown in China due to the recurring resurgence of Covid-19 will bring a slump in demand for oil.  The impact is temporary as lockdown measures won’t sustain for a longer period. It is worth noting that China is a leading consumer of oil and any slump in the overall demand in China will bring a significant impact on oil prices.