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Western Texas Intermediate (WTI), the US crude oil benchmark, is trading around $79.00 on Friday. The black gold rebounds modestly from a seven-week low. However, the upside might be limited due to rising crude inventories in the United States and fading hopes for rate cuts from the US Federal Reserve (Fed).
The Fed left interest rates unchanged on Wednesday amid stubborn inflation. The US central bank noted that it doesn’t plan to cut interest rates until it has “greater confidence” that price increases are easing sustainably to its 2% target, adding that it might take longer than previously expected. The higher-for-longer Fed stance could drag WTI prices lower, as it translates to less demand for oil as activity declines.
On Wednesday, the US Energy Information Administration (EIA) revealed that US crude inventories for the week ending April 26 increased by 7.256 million barrels from a 6.368 million barrel draw in the previous week. The market consensus estimated that stocks would decrease by 2.3 million barrels. This figure registered the highest since June 2023, adding to concerns about a weakening oil demand.
Furthermore, easing geopolitical tensions in the Middle East and the prospect of a ceasefire between Israel and Hamas in Gaza lead to narrow trading in crude oil prices. However, market players will monitor the developments surrounding geopolitical risks. Any rising tension might raise the fear of oil supply disruption in the region and boost the black gold price.
WTI US OIL
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