WTI drops back towards $108.00 as recession fears join OPEC chatters, Biden’s moves eyed

• WTI fades bounce off monthly low, remains pressured of late.
• OPEC’s Barkindo hints at higher output, Biden administration eyes pause on the federal gas tax.
• Beijing’s covid news fails to tame recession fears, hawkish Fed bets add strength to the bearish bias.
• Oil refiners’ meeting with Biden administration will be important to watch, Fed’s

WTI crude oil prices retreat towards the monthly low, despite taking rounds to $108.50 during Monday’s Asian session, as fears of economic slowdown join hopes of higher output. Also weighing on the energy benchmark could be the headlines suggesting relief from the Biden administration during this week’s oil refiners’ meeting.

OPEC Secretary-General Mohammad Barkindo crossed wires late last week while saying that 9.7 million barrels per day of oil will be back by August. The OPEC Chief also mentioned, “The common goal with non-OPEC partners has always been to maintain market stability, not to raise or lower prices.”

Elsewhere, the fears of economic slowdown and the resulting decline in the oil demand also exert downside pressure on the black gold prices of late. Recently, US Treasury Secretary Janet Yellen expected the economy to slow. On the same line were Fed policymakers who eyed rate hikes while fearing that the higher inflation could weigh on the economic outlook. Cleveland Federal Reserve Bank President Loretta Mester, Minneapolis Fed President Niel Kashkari and Fed Board of Governors member Christopher Waller are among the Fed hawks expecting high inflation, softer economic growth and the need for faster rate hikes.

It should be noted that news from Xinhua suggesting Beijing’s receding covid woes and a gradual unlock, once again, put a floor under the oil prices. However, chatters surrounding a possible pause on the federal gas tax from US President Joe Biden’s administration, during this week’s meeting with the oil refiners, weigh on the WTI crude oil prices.

In addition to the oil players’ gathering, Testimony from Fed Chairman Jerome Powell will also be an important event for the WTI traders to watch for clear directions.

Technical analysis

An upward sloping support line from early December 2021, around $106.00 by the press time, restricts short-term WTI declines. However, buyers could wait for a clear upside break of the late March swing high, near $115.85, to retake control.