WTI records daily highs around $87

WTI is paring its earlier losses and prints gains of almost 0.40% on Monday as China’s continuing losing monetary policy, would likely make up for any reduced demand amidst high inflation and an economic deceleration, sparked global recession fears.

At the time of writing, WTI is trading at $85.33 per barrel, below its opening price by 0.32%. China’s central bank, announced that it would continue to stimulate the economy, rolling over medium-term policy loins on Monday while maintaining its key interest rate unchanged for the second straight month. That put a lid on the oil’s rally propelled by a weaker US dollar.

During the Chinese Communist Party Congress, Chinese President Xi Jinping emphasized that his government would extend a zero-Covid policy, which would likely impact oil demand.

Last week, Fed officials reiterated that the US central bank would continue tightening its monetary policy. Most analysts expect the Fed funds rate (FFR) to peak at around 4.765-5%. Therefore, further US dollar strength is foreseen, constituting headwind for black gold.

OPEC’s decision to cut production by more than an estimated 2 million barrels has increased flows to the oil market. Hedge funds and other money managers purchased the equivalent of 47 million barrels of petroleum-related futures and options in the week to October 11.