WTI steadies above $100.00 on China’s prudent policy support and a rise in oil stockpiles

• WTI auctions above $100.00 as the PBOC will step up its prudent stance on monetary policy.
• PBOC decided to lose its policy stance amid the pandemic of the Covid-19.
• High oil inventories by the API failed to impact oil prices.

West Texas Intermediate (WTI), futures on NYMEX, is oscillating in a narrow range of $100.78-102.35 since the New York session. The oil prices are consolidating after a strong upside move from Monday’s low at $95.25. The asset has regained strength after the People’s Bank of China (PBOC) announced that it will step up its prudent monetary policy to support the economy.

The announcement from the PBOC came after the pandemic of the Covid-19 in China. After the spread of the Covid-19 in Shanghai, the faster communicable disease has spread to Beijing, which has renewed fears of demand worries. To spurt the aggregate demand, the PBOC has decided to further loosen its monetary policy, which may result in liquidity expansion in the economy. China, being the biggest importer of oil carries a significant impact on oil prices.

Meanwhile, higher oil stockpiles reported by the American Petroleum Institute (API) on Tuesday failed to bring any pause in the momentum of oil prices. The API recorded oil inventory for last week at 4.50 million barrels against the market consensus of 2.20 million barrels.

On the supply front, Eurozone is still discussing the embargo on Russian oil as a quick prohibition may add to the fears of a recession in Europe. On Wednesday, investors will keep an eye on the release of the official weekly crude oil inventories by the Energy Information Administration (EIA). The agency is expected to report the oil stockpiles at 2.167 million barrels against the prior print of -8.02 million barrels.