• WTI prints mild losses to pare the first weekly gain in three.
• Hopes of economic recovery battle with China-linked concerns, geopolitical headlines to trouble oil traders.
• DXY rebound adds to the upside filters but record US exports suggest increasing energy demand.
• Risk catalysts are the key for near-term directions, US Core PCE Inflation eyed as well.

WTI crude oil prices extend the previous day’s pullback from a fortnight high while printing mild losses around $88.00 during Friday’s Asian session. In doing so, the black gold snaps the previous three-day uptrend while consolidating the first weekly gain in three.

Although record US oil exports and firmer US Gross Domestic Product (GDP) data tamed the recession fears on Thursday, concerns over China’s economic health and cautious mood in the market weigh on the commodity prices of late. Also, recent headlines suggesting no preparations on the part of Russia to use nuclear weapons in the war with Ukraine seemed to have challenged the oil buyers.

Gross Domestic Product (GDP) rose 2.6% on an annualized basis, more than expected, in the third quarter (Q3). It should also be noted, however, that the details suggesting a fifth consecutive fall in private consumption challenged the Fed hawks as it showed the policymakers are gradually nearing the target of slowing down private domestic demand.

“Data showed record U.S. crude exports, a hopeful sign for demand. Speculation that central banks could be nearing the end of rate-hiking cycles added support, after the European Central bank raised rates by 75 basis points (bps),” stated Reuters.

Also keeping oil buyers hopeful is the Western efforts to jointly cap the Russian energy price, which in turn escalates the political tension between Moscow and the West to suggest further hardships for WTI bears.

On the other hand, China’s zero-covid policy and mixed growth, as well as the recently strong rate hikes from the major central banks, challenge the black gold buyers. On the same line could be the latest talks between Saudi Arabia and the diplomats from Pakistan and France that signal more output.

Looking forward, oil traders may keep their eyes on the risk catalysts for fresh impulse. Also important will be the Core PCE Price Index for September, expected to rise to 5.2% versus 4.9% prior. That said, a firmer print of the Fed’s preferred inflation gauge could add strength to the yields and hawkish Fed bets, which in turn will be favorable for the oil bears.

Technical analysis

Thursday’s Doji challenge WTI buyers but a convergence of the 21-DMA and 50-DMA challenge oil sellers around $86.00.