Oil prices were steady on Tuesday, as market participants await the release of the US inflation data later in the week. WTI's price fluctuated around $74.7 per barrel, trading with low volatility. If the WTI price declines, it may encounter support near $70.2 per barrel, while resistance may be found near $81.4 per barrel.
US inflation data are scheduled to be released on Thursday and are this week’s most highly anticipated fundamentals, as they may influence the Federal Reserve’s monetary policy. Aggressive rate hikes stifle economic activity fuelling recession fears. Several major Central Banks, such as the US Federal Reserve, the ECB, and the BOE raised interest rates significantly over the past year, reducing the oil demand outlook. As inflation starts to cool though, central banks are starting to lower the pace of rate hikes, raising oil demand expectations.
The global economic slowdown and recession concerns are decreasing the oil demand outlook, putting pressure on oil prices. International Monetary Fund Director Kristalina Georgieva has warned that a third of the world may face recession this year, stressing that the economy of the US, China, and the EU is slowing simultaneously.
Increased optimism about China’s economic reopening is providing support for oil prices. China opened its borders this week, fuelling hopes that the country is gradually ending its strict Covid policy. China is the world’s largest energy importer and prolonged lockdowns have dampened oil demand. The Chinese government recently eased some of its strident Covid regulations, abandoning its zero-Covid policy. China’s economy, however, has suffered from prolonged lockdowns and the country’s debt has ballooned over the past few years. China’s weak economy is raising concerns over the demand outlook for oil, pushing prices down.
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