WTI rebound from $73.00, downside looks likely as weak US PMI trigger recession fears

Oil prices have sensed a moderate demand around $73.00 after carnage on Wednesday.
Bleak economic outlook led by sustainability of higher interest rates by the Fed impacts the black gold.
Weaker manufacturing activities in the US consecutively for the second time have triggered recession fears.

Sagar Dua FXStreet

West Texas Intermediate (WTI), futures on NYMEX, has picked some bids in the Asian session after crashing to near $73.00. The rebound move seems less-confident for now as oil prices witnessed a carnage on Wednesday led by a consecutive drop in United States Manufacturing PMI data reported by the Institute of Supply Management (ISM) department.

The Manufacturing PMI in the United States dropped to 48.4 vs. the expectations of 48.5 and the former release of 49.0, recorded as the lowest reading since May 2000. Aggressive policy tightening measures adopted by the Federal Reserve (Fed) to tackle the stubborn inflation has resulted in lower volume of manufacturing activities. Firms are dodging debt raising discussions to avoid higher interest obligations, which has led to unchanged production capacities and lower execution of investment opportunities.

Meanwhile, upbeat labor market in the United States is giving a meaningful reason to the Federal Reserve (Fed) to continue higher interest rates for a secular period. The Unemployment Rate is highly stable at lower levels and wage growth is strong, which is still keeping reins in the inflationary pressures.

Oil stockpiles reported by the American Petroleum Institute (API) have increased by 3.298 million barrels for the week ending December 30. Operational activities were majorly shut down as individuals were busy in New Year celebrations. Going forward, the US official oil inventory data will provide fresh impetus.

In the Asian domain, rising Covid infections in China is showing signs of delayed recovery in its economic prospects. Analysts at Rabobank are of the view that China is still trying to cope with the surge in Covid infections after restrictions were eased. "The recent surge in Covid infections is not only straining the Chinese health care system. Bloomberg reports that it may now also stifle Beijing’s plans to kick-start a domestic semiconductor industry to compete with US-controlled supply chains.

WTI US OIL

Overview
Today last price	73.85
Today Daily Change	0.52
Today Daily Change %	0.71
Today daily open	73.33

Trends
Daily SMA20	76.83
Daily SMA50	80.51
Daily SMA100	83.41
Daily SMA200	93.31

Levels
Previous Daily High	77.53
Previous Daily Low	72.91
Previous Weekly High	81.19
Previous Weekly Low	76.86
Previous Monthly High	83.3
Previous Monthly Low	70.27
Daily Fibonacci 38.2%	74.68
Daily Fibonacci 61.8%	75.77
Daily Pivot Point S1	71.65
Daily Pivot Point S2	69.97
Daily Pivot Point S3	67.03
Daily Pivot Point R1	76.28
Daily Pivot Point R2	79.22
Daily Pivot Point R3	80.9

Author

Sagar Dua

FXStreet

Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.

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