WTI falls below $80 as attention goes to US Inflation for additional advice

During the Asian session, West Texas Intermediate (WTI) futures on the New York Mercantile Exchange (NYMEX) have felt selling pressure while seeking to surpass the crucial $80.00 resistance level. Tuesday's announcement of the United States Consumer Price Index (CPI) data has caused investors to divert their attention away from the price of oil.

The oil price increased on Friday as Russia announced a reduction in oil production in retaliation for price limitations imposed by G7 nations to prevent Russia from supporting its war necessities against Ukraine. Alexander Novak, Russia's energy minister, indicated that the country would reduce oil production by 500,000 barrels per day (bpd), or 5% of its output in March.

The United States Treasury Department has reiterated that it intends to limit the Kremlin's revenues per barrel in order to stifle Moscow's support for the war in Ukraine, while ensuring that Russian oil shipments reach necessary markets.

In the meantime, the US Dollar Index (DXY) is on the verge of extending its three-day high above 103.35 during the Asian session due to predictions that the US inflation data would show an unexpected increase in light of the tight labor market. The consensus, however, favors a reduction in annual headline inflation to 5.8% from the previous report of 6.5%, and in core inflation to 5.4% from 5.85.

Aside from that, the expression of deflation in China's CPI report published last week indicates that the method of economic recovery in the world's second-largest economy following the removal of price controls is somewhat slow. It will take adequate time for the economy to return to its pre-pandemic growth rate. This might dampen hopes for a rapid revival in oil demand.