• Oil prices are expected to extend their gains on open rejection-reverse formation.
• The OPEC’s promise to pump more oil seems doubtful.
• More Covid-19 contain measures in China are underpinning demand worries.

West Texas Intermediate (WTI), futures on NYMEX, is displaying back and forth moves in a narrow range of 108.63-108.90. The oil prices have recovered their entire intraday losses on firmer responsive buying action. As the asset has recuperated after a downside move, the oil prices have triggered a bullish open rejection-reverse in which the asset could extend its gains after overstepping the opening price at $109.21 decisively.

Oil prices are expected to remain in the grip of bulls as the biasness of the market participants over the oil counter is intact. Despite the promise of more oil by the OPEC last week, oil prices are flexing their muscles. The OPEC promise to pump more oil seems dubious as a few OPEC members including Nigeria and Angola are failing to meet their desired quotas. Two major oil producers UAE and Saudi Arabia carry the potential to increase their output but they are currently producing around 10.5 million barrels per day (bpd). So elevation of oil output further in an already higher supply environment looks difficult to achieve.

Meanwhile, rising curbs in two major cities of China: Shanghai and Beijing are denting the aggregate demand. It is worth noting that China is the biggest importer of oil in the world and slippage in demand for oil by the giant elevates concerns over the oil demand.