WTI bears approach $100.00 amid impending economic slowdown, output increase

• WTI extends week-start pullback amid fears of slower demand, higher output.
• US President Biden is up for pushing Middle East producers for more oil production.
• 14 oil firms will benefit from the US Strategic Petroleum Reserve (SPR) action.
• US API inventories, risk catalysts will be important to watch for fresh impulse.

WTI crude oil takes offers to renew its intraday low near $100.25 during the initial Asian session on Tuesday. The black gold reversed from a one-week high the previous day while snapping a two-day uptrend as the market’s fears of recession joined chatters surrounding the likely increase in oil output.

Recently, White House National Security Adviser Jake Sullivan said, per Reuters, “US President Joe Biden will make the case for greater oil production from OPEC nations to bring down gasoline prices when he meets Gulf leaders in Saudi Arabia this week.”

The news joined another piece from Reuters suggesting an increase in the oil output saying, “The United States on Monday said 14 companies had been awarded contracts for the latest sale of oil from the Strategic Petroleum Reserve as part of the administration's efforts to ease disruption caused by the war in Ukraine.”

Elsewhere, a jump in the US inflation expectations and comments from the US policymakers suggesting more pain ahead escalated the fears of economic slowdown, which in turn weighed on the energy demand. That said, one-year US inflation expectations jumped to the record high of 6.8% in June, versus 6.6% prior, per the NY Fed’s survey of one-year-ahead consumer inflation expectations. The inflation expectations followed strong US employment data, published Friday, to underpin hopes of an aggressive Fed rate hike and fuelled concerns over the health of the US economy, as well as the global ones. That said, the latest US jobs report mentioned that the US Nonfarm Payrolls (NFP) rose by 372K for June, versus expected 268K and downward revised 384K prior.

Further, White House Press Secretary Karine Jean-Pierre told reporters that she expects new Consumer Price Index (CPI) data to be highly elevated. Further, Atlanta Fed President Raphael Bostic said that recent inflation data has not been as encouraging as I would have liked, per Reuters.

Additionally, Shanghai’s first coronavirus Omicron sub-variant BA-5 case escalated virus woes after the dragon nation failed to sustain the unlock activities. On the same line was firmer inflation data from the Asian major and doubts over Beijing’s GDP goal, as well as on the stimulus’ ability to renew optimism, which in turn challenges oil demand.

Moving on, weekly readings of the industrial player American Petroleum Institute (API), prior 3.825M, could entertain the oil traders. Though, major attention will be given to the chatters surrounding the recession.

Technical analysis

Although the 200-DMA challenges WTI bears around $93.00, any intermediate recovery appears elusive until the quote rises past $106.10-15 resistance confluence, including the 100-DMA and downward sloping trend line from June 14.