WTI struggles above $85.00 even as hurricane Fiona, US President Biden favor bulls

• WTI remains sidelined around the eight-month low, recovers of late.
• News concerning hurricane Fiona, China and comments from US President Biden favored immediate rebound.
• Sluggish calendar, off in Japan, the UK restrict immediate moves.

WTI crude oil prices print mild gains around $85.30 during Monday’s Asian session, after declining for the last three consecutive weeks, as traders prepare for the Fed’s monetary policy outcome. Also keeping the black gold positive are the price-positive headlines from China, as well as concerning the US hurricane Fiona. Furthermore, comments from US President Joe Biden also seemed to have favored oil prices amid a sluggish session.

National Hurricane Center (NHC) recently updated that the center of hurricane Fiona will move near the Northern coast of the Dominican Republic tonight. The update shared by Reuters also mentioned, “Hurricane Fiona now moving just west of Puerto Rico and heading for the eastern Dominican Republic, causing catastrophic flooding.”

Elsewhere, news that Dalian, a city in China’s Liaoning province, will lift the citywide lockdown on Monday, also seemed to have favored the WTI rebound. On the same line are comments from US President Biden who said, “I'm more optimistic than I have been in a long time.” The national leader also stated that they are going to get control of inflation.

However, the hawkish bets on the Fed and economic fears emanating from China, as well as Europe, keep the oil bears hopeful. On Friday, the University of Michigan's preliminary readings of Consumer Sentiment for September came in at 59.5, up from 58.6 in the prior month while easing below 60.0 market forecasts. With the firmer US data, the odds of the Fed’s 75 basis points rate hike (bps) rose to nearly 80%, around 82% by the press time, while the market’s expectations of a full one percentage increase in the Fed rate rose to 18%.

Looking forward, demand fears are likely to keep exerting downside pressure on the energy front even if the lack of major data/events on Monday, as well as the hurricane updates, are likely to help the black gold in paring the latest losses.

Technical analysis

Any recovery below the 21-DMA hurdle surrounding $88.30 remains elusive. Alternatively, a two-month-old bearish channel’s support line, around $79.35 by the press time, restricts short-term declines of the black gold.