WTI moves around $81.50, recession concerns limit gains

• WTI oscillates in limited territory around $81.50 in the absence of a possible trigger.
• The rise in the price of oil is limited by growing concerns about a US recession.
• The better prospects for the Chinese economy after the lifting of pandemic controls offer, on the other hand, support for the price of oil.

The West Texas Intermediate (WTI), futures on NYMEX, shows movements back and forth in a narrow range around 81.50 dollars in the early bars of the European session. Oil price struggles to find direction as gains are capped by concerns about escalating recession in the US while declines are constrained by optimism about economic recovery in China.

The Chinese economy has lifted pandemic controls and a strong recovery in oil demand is expected during 2023. Optimism for China’s recovery is supporting stronger bets on the extension of oil and other commodity prices. The Chinese administration and the People’s Bank of China (PBOC) are expected to favor fiscal stimulus and expansionary monetary policy to spur the scale of economic activities.

Meanwhile, growing concern about the US recession is limiting the rise in oil prices. Economic activities in the United States have contracted sharply as the Federal Reserve (Fed) has been raising interest rates at a breakneck pace. Fed Chairman Jerome Powell and other policymakers have argued for consistent higher interest rates at peaks over a longer period to contain inflation. This could restrict companies from borrowing funds to avoid higher interest obligations.

On supply, new headlines that the US administration is considering canceling the planned sale of oil from its Strategic Petroleum Reserve (SPR) in 2023 are backing oil bulls. US President Joe Biden is trying to refill the oil reserve as it has been tightly reduced to stem the escalation of oil prices in 2022, Energy Intelligence reported.