WTI: Downside remains exposed towards 200 DMA amid recession fears

WTI (NYMEX futures) is gyrating around $99 after its recovery ran into resistance above the $100 mark earlier in the Asian session. The spot is consolidating the 9.5% sell-off witnessed on Tuesday, as bears gather strength for the next push lower.

Global recession fears mounted, as liquidity returned after a three-day holiday break in the US, battering the higher-yielding assets such as oil. Raging inflation, surging energy prices and major central banks’ rate hike stance intensified economic slowdown worries.

Despite demand growth concerns for oil and its products, the black gold continued to ride higher on the risk-aversion wave. At the time of writing, a minor relief rally in the European stocks is allowing the US oil some breathing space. Although the downside remains more compelling, as a fresh lockdown looms, with China’s Shanghai announcing two new rounds of mass testing after new infections were detected in the country’s financial hub.

Apart from the discouraging fundamental factors, WTI’s daily technical setup also points to the additional downside.

The bearish 21-Daily Moving Average (DMA) is set to cut the 50 DMA from above, which if occurs will confirm a bear cross. The black gold may witness a fresh downslide to retest over two-month lows near $95.75.

A break below the latter will put the ascending 200 DMA at $92.51 under threat.

WTI: Daily chart

The 14-day Relative Strength Index (RSI) has turned flat just above the oversold region, still lurking deep in the negative zone. This suggests that any recovery in oil price is likely to remain short-lived.

On the flip side, acceptance above $100 is critical to initiating any meaningful recovery towards the horizontal 100 DMA at $105.75. Further up, doors will reopen towards the $110 round figure.

WTI: Additional levels to watch