• WTI is likely to extend losses as the DXY has accelerated broadly on escalating US-China tensions.
• The oil cartel may promise a modest addition to the global oil supply.
• Recession fears in the global economy will keep the oil prices on the back foot.

West Texas Intermediate (WTI), futures on NYMEX, is declining sharply towards $90.00 after failing to sustain above the critical hurdle of $95.00 on Tuesday. The black gold has witnessed an extreme sell-off as escalating US-China tensions brought a juggernaut rebound in the US dollar index (DXY). Also, the market participants are expecting a promise of pumping modest oil quantity in the global supply by the OPEC in its meeting on Wednesday.

On a broader note, the oil prices are oscillating in a$9 wide range for the past three weeks and the downside remains favored due to various catalysts. The odds of a recession are advancing sharply as various nations have come forward with lower manufacturing activities. Oil’s leading consumer, China reported a downbeat Caixin Manufacturing PMI on Monday as the resurgence of Covid-19 in July hit their economic activities.

Also, the ongoing US-China tensions amid death threats to US House Speaker Nancy Pelosi on her personal visit to Taiwan may result in embargos with China. This may further deteriorate their oil demand. Meanwhile, with more oil supply from OPEC in times when demand is not picking up, oil prices could be filthier ahead.

Many western central banks have elevated interest rates to squeeze liquidity from the market heavily. This will force the corporate to inculcate more filters on investment avenues. Fewer investments will squeeze economic activities and eventually, will trim the demand forecast for oil.