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Western Texas Intermediate (WTI), the US crude oil benchmark, is trading around $78.90 on Friday. The black gold edges higher amid the recent drop in US crude inventories and the possible interest rate cuts by the Federal Reserve (Fed).
The recent US CPI inflation report this week showed that US inflation eased slightly in April, prompting the expectation of interest rate cuts from the US Fed in September. This, in turn, weighs on the US Dollar (USD) and benefits USD-denominated oil as lower interest rates help stimulate the economy, which can boost crude oil demand.
About the data, a decline in oil inventories lifted the black gold. Crude inventories in the US for the week ending May 3 fell by 2.5 million barrels to 457 million barrels, from 1.36 million barrels drawn in the previous week, according to the Energy Information Administration (EIA). The market consensus projected that stocks would decrease by 1.35 million barrels.
On Thursday, Israel’s tanks moved into Jabalia in northern Gaza and pummelling Rafah in the south without advancing, per Reuters. Ceasefire negotiations mediated by Qatar and Egypt are at a stalemate, with Hamas demanding a stop to attacks and Israel refusing until the group is annihilated. Oil traders will closely monitor the developments surrounding the renewed geopolitical tensions in the Middle East. Any escalating geopolitical risks might raise concern about oil supply disruptions, lifting the WTI prices.
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