• Oil prices are expected to slip towards $90.00 on further escalation in recession fears.
• Lockdown worries in China and interest rate hikes by Western central banks have trimmed forecasts.
• A release of higher US inflation print may expose the black gold to more downside.

West Texas Intermediate (WTI), futures on NYMEX, have displayed a sheer downside after surrendering the psychological support of 100.00 last week. The black gold registered a fresh three-month low at $91.70 on Tuesday. More downside is expected by the oil prices towards $90.00 as demand woes are likely to accelerate further on lockdown worries in China.

The nightmare of a decent slump in the demand for oil is haunting the oil bulls. Western central banks are stepping up their interest rates to contain the soaring inflation. The deployment of policy tightening measures is squeezing liquidity from the market and the corporate sector is left with costly money. This has forced them to add more filters to their investment opportunities. Lower investment by the corporate is hurting the oil demand.

Apart from that, the resurgence of Covid-19 in China despite the adaptation of the Zero-Covid policy in the past two months has spooked the market sentiment. The back-to-back pandemic situation has renewed the fears of slippage in economic activities. The deployed restrictions on the movement of men, materials, and machines have dampened the market mood. It is worth noting that China is the largest exporter of oil and growing concerns about the oil demand in its largest consuming territory are sufficient to bring extreme volatility in the oil prices.

Going forward, the release of the US inflation will have a significant impact on oil prices.  A higher inflation print in comparison to its estimates may shore up the greenback and hammer oil prices further. As per the market consensus, US inflation is seen at 8.8%.