The below code with .PNG file referenced, works for me. However, while the .PNG gets inserted in the email, it's not actually embedded. As a result, when the recipient receives the email, the image is not displayed.
Sub Mail_workbook_Outlook_1()
relativepath1 = ThisWorkbook.Path & Application.PathSeparator & "Signature99" & ".png"
'Create a new email message
Set OutlookMessage = OutlookApp.CreateItem(0)
On Error Resume Next
With OutlookMessage
.To = Prime_Email
.cc = cc1
.BCC = ""
.Subject = "Volume - " & " " & str2 & "(" & Subject & ")"
.HTMLBody = RangetoHTML(Range("E2:N16")) & "<img src ='" & relativepath1 & "'>"
.send
'.Display
End With
On Error GoTo 0
Set OutlookMessage = Nothing
Set OutlookApp = Nothing
End Sub