WTI slides towards $82.00 as Fed, US government raises demand fears, focus on Russia

• WTI prints four-day downtrend as it approaches two-week-old support line on demand fears, supply concerns.
• US President Biden pushes for energy projects, Fed amplified recession fears with 0.75% rate hike.
• Russia’s mobilization of troops renewed supply fears, EIA reported softer inventory build.
• Risk catalysts are the key, central banks and Moscow-Kyiv tension are important to watch for fresh impulse.

WTI crude oil prices remain depressed for the fourth consecutive day amid fears of energy demand during early Thursday morning in Asia. The black gold’s latest weakness could be linked to the US Federal Reserve’s rate hike and President Joe Biden’s push for more energy projects. While portraying the same, the black gold declines to $82.40 by the press time.

Fed announced 75 basis points (bps) of a rate hike, the third one in a line of such kind, as it wants to tame inflation fears even at the cost of a “sustained period of below-trend growth” and a softening in the labour market. Fed Chairman Jerome Powell also signalled that the way to tame inflation isn’t painless ahead. While the Fed matched market forecasts, the economic fears surrounding the rate hikes and expectations of another 0.75% increase in November kept the recession fears on the table, despite marking heavy volatility around the announcements.

Elsewhere, the White House recently conveyed that US President Biden supports Senator Joe Manchin's permitting bill to speed energy projects.

It should be noted, however, that Russian President Vladimir Putin’s announcement to mobilize partial troops also reignited the Ukraine-linked geopolitical fears and the supply-crunch fears, which offered an initial run-up to oil prices before the latest downside. Russian President Putin threatened the West on Wednesday, noting that “We have lots of weapons to reply, it is not a bluff.” Following him was Russian Defence Minister Sergei Shoigu who said that “We are fighting not only with Ukraine but the collective west.” In a reaction, German Economy Minister Robert Habeck said, “Partial mobilization of Russian troops is a bad and wrong development,” adding that the “Government is in consultations on next step.” Jens Stoltenberg, NATO's Secretary General, told Reuters that Russian President Putin's announcement of military mobilization and threat to use nuclear weapons was "dangerous and reckless rhetoric."

Also likely to have challenged the black gold’s south-run, but failed, could be the weekly oil inventory details from the US Energy Information Administration (EIA). As per the latest EIA Crude Oil Stocks Change for the week ending on September 16, the inventories eased to 1.142M versus 2.161M forecasts and 2.442M prior.

Technical analysis

An upward sloping trend line from September 08, around $82.00, appears crucial for the short-term direction as a break of which will direct bears towards the monthly low near $81.00. Buyers need validation from the 21-DMA, around $87.10 at the latest.