WTI pares intraday gains near $81.00 as higher EIA Crude Oil Stocks Change join recession woes

• WTI retreats from intraday high, consolidates gains during two-week uptrend.
• Hawkish Fedspeak, downbeat US data underpin economic slowdown fears even as China demand puts a floor under the prices.
• Higher inventory build, recent pause in US Dollar’s downside also challenge Oil buyers.
• Risk catalysts are the key to fresh impulse amid a light calendar.

WTI remains firmer for the second consecutive week even if the intraday buyers retreat during early Friday morning in Europe. That said, the black gold slides to $80.95 while paring the daily gains by the press time.

In doing so, the energy benchmark takes clues from the recent stabilization of the US Dollar, as well as hawkish comments from the Federal Reserve (Fed) officials. On the same line could be the headlines suggesting the US recession and higher crude oil inventory build in the US.

That said, the US Dollar Index (DXY) picks up bids to 102.15 as it consolidates the previous day’s losses, the biggest in over a week, as Fed policymakers favor higher rates during their last public appearances before the 15-day silence period ahead of the February Federal Open Market Committee (FOMC) meeting.

Even so, downbeat US data and looming fears of inflation keep the recession risk on the table and weigh on the Oil prices. On Thursday, the US Unemployment Claims dropped to the lowest levels since late April 2022 and the Philadelphia Fed Manufacturing Survey Index also improved However, US Building and Housing Starts joined the previously release downbeat US Retail Sales and Producer Price Index (PPI) to propel fears of a recession in the world’s largest economy, earlier backed by the softer wage growth and activity data from the US.

Elsewhere, the US Energy Information Administration (EIA) reported an increase in weekly Crude Oil Stocks Change with 8.408M versus -1.75M expected and 18.962M prior, which in turn weighed on the WTI crude oil prices.

Alternatively, the increase in China demand and the People’s Bank of China (PBOC) status quo, as well as the latest tension surrounding Taiwan, seem to put a floor under the Oil prices. Chinese November oil demand climbed to the highest level since February, data from the Joint Organisations Data Initiative showed on Thursday, reported Reuters.

Looking forward, WTI crude oil price may pare some of its recent gains as the US Dollar is gradually justifying hawkish Fed talks. However, a lack of major data/events could challenge the greenback’s upside.

Technical analysis

A horizontal area comprising multiple levels marked since October 2022, near $81.30 by the press time, appears a tough nut to crack for Oil buyers. On the contrary, a fortnight-long ascending trend line, near $79.00, as well as a firmer RSI (14), not overbought, keeps the WTI bulls hopeful.