West Texas Intermediate (WTI) price is trading flat on Tuesday amid a softer US Dollar and muted risk sentiment. Touching briefly on Monday’s price action, WTI has fallen to the low of $72.31 level on the back of a strong risk-off environment ignited by Silicon Valley Bank (SVB) and Signature Banks’ fallout. Since then, the WTI price has rebounded sharply in the wake of the Federal Reserve’s backstop plan. After hitting the high around the $76 mark on Monday, the WTI price again drifted lower, since the US Dollar dynamics took a shift.
Higher borrowing cost across the globe is denting the financial system and raising growth concerns. WTI price is in the corrective decline since the China reopening story is not looking optimistic, as the populous country lowered its growth forecast to 5.0%.
The SVB fallout is adding to the global growth concern, as it is perceived as an indication of the first dent among many in the financial system. Businesses are struggling with their repayments amid rising borrowing costs and eventually, it will result in a slowing demand.
Despite tighter production and many voluntary cuts from the Organization of the Petroleum Exporting Countries (OPEC), the WTI price is struggling to surpass the $80 mark.
Oil prices are impacted by a combination of factors like the US Dollar, inflation, OPEC, and global growth concerns. Adding all of the aforementioned factors, it is hard to justify the directional character of oil prices but seems that the oil market is taking its cue from growth concerns mainly.
It will also be important to watch the OPEC stance on lower oil prices since these countries are facing a struggle to keep oil above the oil prices to desired $80 mark.
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