WTI drops to near $85.00 as recession fears escalate, US CPI buzz

West Texas Intermediate (WTI), futures on NYMEX, witnessed a steep fall to near $85.00 after surrendering the critical support of $87.00. The oil prices have attempted a rebound, however, the downside risks are still favored amid escalating fears of a recession in the US economy.

Tuesday’s warning from chairman and CEO of JPMorgan Chase, Jamie Dimon that the US economy could slip into recession in the coming six to nine months grabbed the spotlight. He further added that the Eurozone is already in recession and it may put the mighty US into recession too. He cited soaring inflation and interest rates, and the war situation as responsible for the recession situation ahead reported NewsBytes.

While US President Joe Biden has denied an extreme recession situation in the US, he believes that ''If recession will be there, it’ll be very slight. The comments from US President Joe Biden could be a sigh of relief for the market participants.

On the global front, International Monetary Fund (IMF) has cut global growth projections. The institution has trimmed its 2023 global Gross Domestic Product (GDP) forecast to 2.7%, 20 basis points (bps) lower than expectations in July, keeping the 2022 projections unchanged at 3.2%. A decline in the global growth rate may keep the oil prices volatile ahead.

For further guidance, Tuesday’s inflation report will be the key catalyst. Price pressures in the US economy have not responded well to the policy tightening announcements by the Federal Reserve (Fed). And, a higher-than-projected report would bolster the case of the fourth consecutive 75 basis points (bps) rate hike by the Federal Reserve (Fed). More stretching in Fed’s policy rates would dwindle the oil demand.