WTI pares biggest daily loss in four months around $99.00 amid recession fears

• WTI holds onto the corrective pullback from the lowest levels since late April.
• Bears take a breather after a volatile day, fears of economic slowdown drowned commodities.
• OPEC’s Barkindo failed to impress buyers amid market pessimism.
• Weekly API inventories, Fed Minutes and US ISM Services PMI will be important to watch for clear directions.

WTI crude oil picks up bids to $99.00 as it pares the biggest daily loss since March during Wednesday’s Asian session. The black gold dropped the most in many ways while refreshing the three-month low as recession fears outweighed supply-crunch concerns.

Growing fears of global recession joined speculations that China may recall covid-led lockdowns to drown the energy benchmark the previous day. The pessimism intensified after policymakers from the major central banks signaled further hardships for the global economy. On the same line was China’s mass covid testing announcement.

The bearish bias failed to cheer news that the US is up for removing the Trump-era tariffs on China, as well as comments from the Secretary-General of the Organization of the Petroleum Exporting Countries (OPEC). OPEC Secretary-General Mohammad Barkindo said on Tuesday that the energy sector is facing huge challenges on multiple fronts. "Refining capacity in OECD countries declined by 3.3% globally in 2021," added OPEC’s Barkindo per Reuters.

It should be noted that the news conveying an end to the Norwegian oil and gas workers’ strike and hopes of further oil output from Venezuela and Iran also exert downside pressure on the quote.

That said, the US dollar’s strength and the downbeat risk profile were the main catalysts behind the WTI’s biggest slump in many days. US Dollar Index (DXY) jumped to the highest levels in two years while equities dropped, before a mild recovery, whereas the US Treasury yields refreshed one-month low while inverting the yield curve between the two-year and 10-year coupons.

Looking forward, the Federal Open Market Committee (FOMC) Minutes and the US ISM Services PMI for June will be important for fresh impulse. Further, API Weekly Crude Oil Stock for the week ended on July 01, prior -3.799M, will also be crucial to follow.

Technical analysis

A clear downside break of an upward sloping trend line from February 18, around $101.30 by the press time, keeps WTI bears hopeful of witnessing further declines.