WTI aims to recapture $75.00 as China’s recovery hopes soar, Fed Powell’s speech in focus

• The oil price has soared nearby $75.00 amid hopes of a solid recovery in China.
• IEA’s Birol claimed half of the growth in global oil demand this year will come from China.
• Investors should brace for a hawkish interest rate guidance in Fed Powell’s speech.

West Texas Intermediate (WTI) is on the verge of capturing the critical resistance of $75.00 in the Asian session. The black gold recovered dramatically after dropping to near $72.60 amid growing hopes of an economic recovery in China after dismantling the pandemic controls.

The recovery move in the oil price was extremely firmer despite caution in the market mood. Meanwhile, the US Dollar Index (DXY) has corrected to near 103.17 after printing a fresh four-week high of 103.40. After a three-day strong winning spell, the USD Index is expected to display a sideways performance ahead of the speech from Federal Reserve (Fed) chair Jerome Powell, which is scheduled for Tuesday.

Rising fears of a recession in the United States have already dented oil demand for the past one year. And, a further decline in oil orders looks likely on expectations that the Fed will hike interest rates amid skyrocketing employment additions in the US labor market in January. A sheer increase in the US employment numbers despite slowdown in activities has made the battle against inflation uglier. Stronger-than-anticipated fresh additions of labor could propel a rebound in the declining trend of the US Consumer Price Index (CPI).

Meanwhile, commentary from International Energy Agency (IEA) Executive Director Fatih Birol on the sidelines of the India Energy Week conference on Sunday that “Oil producers may have to reconsider their output policies following a demand recovery in China, the world's second-largest oil consumer,” as reported by Reuters has infused an adrenaline rush into the oil bulls. He further claimed, “Half of the growth in global oil demand this year will come from China.”

For further guidance, investors will keep an eye on the oil stockpiles data by the US American Petroleum Institute (API) for the week ending February 03.