WTI oscillates in a range around $85.00, Middle East tensions remain in focus

• WTI is seen consolidating the previous day’s goodish recovery gains from a nearly two-week trough.
• The Israel-Gaza conflict continues to fuel concerns about supply disruptions and lend some support.
• Looming recession risks and stronger USD cap gains for the commodity ahead of the US Q3 GDP.

West Texas Intermediate (WTI) Crude Oil prices struggle to capitalize on the previous day's goodish rebound from sub-$82.00 levels, or a near two-week low and oscillates in a narrow trading band through the Asian session on Thursday. The commodity currently trades around the $85.00/barrel mark, nearly unchanged for the day, as investors keep a close eye on developments surrounding the Israel-Haman war.

Israel’s commitment to a ground assault on Hamas targets in Gaza has raised the risk of an escalation in the conflict to the wider Middle East region, which could disrupt crude supplies. This, in turn, is seen as a key factor acting as a tailwind for WTI Crude Oil prices. The upside, however, remains capped in the wake of doubts over a strong global fuel demand, amid looming recession risks, and a rise in US crude inventories.

The weak PMI data from the Euro Zone released on Tuesday revived fears about a deeper global economic downturn, which could potentially dent fuel demand. Adding to this, the Energy Information Administration reported on Wednesday that US crude inventories rose by 1.4 million barrels to 421.1 million barrels in the week to October 20, well above consensus estimates. This pointed to some cooling of fuel demand in the US.

The aforementioned mixed fundamental backdrop is holding back traders from placing aggressive directional bets around Crude Oil prices and leading to subdued rage-bound price action. Investors also prefer to wait on the sidelines ahead of the Advance US Q3 GDP print, due later during the early North American session. A stronger US economy gives the Federal Reserve (Fed) more headroom to keep rates higher for longer. This might continue to underpin the US Dollar (USD) and cap the upside for the US Dollar-denominated commodities, including Oil prices.

Technical levels to watch