WTI juggles around $81.50 as US recession worries cap upside

• WTI oscillates in a limited territory around $81.50 amid the absence of a potential trigger.
• The upside in the oil price is capped amid rising worries about the US recession.
• While better prospects for the Chinese economy after the lifting of pandemic controls are supporting the oil price.

West Texas Intermediate (WTI), futures on NYMEX, is displaying back-and-forth moves in a narrow range around $81.50 in the early European session. The oil price is struggling to find direction as the upside is capped due to escalating recession worries in the United States while the downside is restricted amid optimism over economic recovery in China.

The Chinese economy has lifted pandemic controls and the street is expecting a sheer recovery in the oil demand in CY2023. Optimism for China’s recovery is supporting firmer bets for price extensions in oil and other commodities. Chinese administration and the People’s Bank of China (PBoC) are expected to favor fiscal stimulus and expansionary monetary policy to spurt the scale of economic activities.

Meanwhile, rising worries about the US recession are capping the upside of the oil price. Economic activities in the United States have shrunk dramatically as the Federal Reserve (Fed) has hiked interest rates at a sheer pace. Fed chair Jerome Powell and other policymakers have been advocating the consistency of higher interest rates at peak for a longer period to contain the sticky inflation. This might restrict firms from borrowing funds to avoid higher interest obligations.

On the supply front, fresh headlines that the United States administration is considering the cancellation of the planned sale of oil from its Strategic Petroleum Reserve (SPR) in CY2023 are supporting oil bulls. US President Joe Biden is looking to refill the oil reserve as one was eased firmly to tame soaring oil prices in CY2022 as reported by Energy Intelligence.