WTI drops from $80.00 as focus shifts to US Inflation for further guidance

• The oil price has sensed selling interest after reaching near $80.00.
• Russia announced an oil production cut by 5% of its total output in retaliation against the price cap by G7 countries.
• A surprise jump in the US inflationary pressures might trigger volatility ahead.

West Texas Intermediate (WTI), futures on NYMEX, have sensed selling pressure while attempting to surpass the critical resistance of $80.00 in the Asian session. The oil price has dropped as investors have shifted their focus toward the release of the United States Consumer Price Index (CPI) data, which will release on Tuesday.

The oil price witnessed a buying interest on Friday after Russia announced a cut in the oil supply to retaliate against price caps imposed by G7 countries to restrict Moscow from funding its war essentials against Ukraine. Russia’s energy minister Alexander Novak announced that the nation will cut oil production by 500,000 barrels per day (bpd) which accords 5% of its output in March.

The United States Treasury Department has been reiterating that it aims to limit Kremlin’s earnings on each barrel in order to squeeze Moscow’s funding for the war in Ukraine while ensuring Russian oil supplies reach markets that need them.

Meanwhile, the US Dollar Index (DXY) is on the verge of extending its three-day high above 103.35 in the Asian session on expectations that the US inflation data will deliver a surprise jump amid the tight labor market. Although, the consensus is favoring a decline in the annual headline inflation to 5.8% from the former release of 6.5% and core inflation to 5.4% vs. 5.85 released earlier.

Apart from that, the expression of deflation from China’s CPI report released last week indicates that the recovery mode in the second-largest economy after the lifting of pandemic controls is quite slow. The economy will take sufficient time in achieving the pre-pandemic growth rate. This could trim optimism over a sheer recovery in the oil demand.