WTI juggles around $80.50 on lower-than-anticipated oil inventories

West Texas Intermediate (WTI), futures on NYMEX, is displaying back-and-forth moves around $80.50 in the early Asian session. The black gold is displaying a sideways auction as investors are awaiting the release of the United States Gross Domestic Product (GDP) data for fresh impetus. According to the estimates, the US GDP is expected to shrink to 2.8% vs. the prior release of 3.2%.

The declining scale of economic activities indicates the consequences of rising interest rates by the Federal Reserve (Fed). A contraction in economic activities clears that the oil demand is facing pressure, which could hurt the oil prices ahead. On the same note, the chances of a slowdown in the pace of the interest rate hike by the Fed will accelerate as a contraction in economic activities will also strengthen recession fears.

The oil price has not shown a power-pack action despite the release of the lower-than-anticipated increase in the oil inventories reported by the US Energy Information Administration (EIA). For the week ending January 20, the EIA has reported an increase in oil stockpiles by 533,000 barrels vs. the expectations of 971,000 barrels.

Meanwhile, celebrations of the Lunar New Year in China have triggered short-term pain in the oil price. Economic activities have dropped significantly which has trimmed the oil demand and might result in a pile-up of oil inventories.

On the supply front, the United States is considering refilling of the Strategic Petroleum Reserve (SPR). US President Joe Biden exploited the oil reserves in CY2022 to fight rising oil prices, which could result in a fresh rally in the oil price ahead.