WTI sees more downside below $88.00 as recession fears soar, US ISM PMI eyed

• Oil prices are facing the wrath of soaring recession fears.
• Weaker Caixin Manufacturing PMI has infused fresh blood in bears.
• Western central banks are gearing up for a fresh rate hike cycle.

West Texas Intermediate (WTI), futures on NYMEX, is on the verge of delivering a downside break of the consolidation, which has formed in a narrow range of $88.54-89.32 in the Tokyo session. The asset has surrendered the psychological support of $90.00 as western central banks are gearing up for a fresh rate hike cycle to fix the inflation chaos.

Price pressures are soaring in the global markets. The European Central Bank (ECB)’s preferred inflation tool Harmonized Index of Consumer Prices (HICP) has crossed the whooping figure of 9% amid soaring energy bills.

The inflation rate in the US economy displayed exhaustion signals but still operates near 8.5%, which is extremely deviated from the desired rate of 2%. And, the UK economy is the major victim of inflationary pressures. As per a Citi survey, long term-inflation expectations have soared to 4.8%, much higher than the long-term target of the Bank of England (BOE) at 2%.

Meanwhile, the downbeat Caixin Manufacturing PMI data has also weakened the oil prices. The economic data has been trimmed to 49.5 against the consensus of 50.2 and the prior release of 50.4. It is worth noting that China is the largest importer of oil and a decline in oil consumption by the largest importer is sufficient to drag the black gold into a negative trajectory.

Also, the black gold has failed to capitalize on a decline in oil stockpiles reported by the Energy Information Administration (EIA) for the past week. The oil inventories have declined by 3.326 million barrels vs. a decline of 3.282 million barrels reported earlier.

In today’s session, the US ISM Manufacturing PMI carries significant importance. As per the consensus, the economic data is seen at 52.0 against the former figure of 52.8. An occurrence of the same will put more pressure on oil prices as recession fears will strengthen further.