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West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $77.20 on Wednesday. WTI price edges lower on the back of easing fears of a wider Middle East war and concerns about the strength of global oil demand.
The ongoing geopolitical tensions in the Middle East could raise the fear of crude oil supply disruptions from a leading oil-producing region, but the wider war seemed less likely as Iran suggested renewed cease-fire talks with Hamas could prevent retaliation.
The International Energy Agency (IEA) forecasted that growth in crude oil demand would slow as the summer US driving season ended in the coming weeks, and be further covered when planned production increases hit the market later this year. Meanwhile, the Organization of the Petroleum Exporting Countries (OPEC) lowered its prediction for global oil demand growth in 2024, citing weaker-than-expected data from the first half of the year and less optimism for the Chinese economy.
The US crude inventories declined significantly last week. According to the American Petroleum Institute (API), crude oil stockpiles in the United States for the week ending August 9 fell by 5.205 million barrels, compared to an increase of 0.18 million barrels in the previous week. The market consensus estimated that stocks would decline by 2.0 million barrels.
On the other hand, the expectation of the interest rate cut by the US Federal Reserve (Fed) might boost the black gold. Traders anticipate a 25 basis point (bps) rate cut in September, followed by similar reductions in November and December. Atlanta Fed President Raphael Bostic said on Tuesday that recent economic data made him “more confident” that the Fed can get inflation back to its 2% target. Still, more evidence is needed before he’s ready to support lowering interest rates. The US Consumer Price Index (CPI) for July, which is due on Wednesday, will be closely monitored and could offer some hints about the interest rate outlook. More By This Author:USD/JPY Trades With Mild Losses Near 147.00 Ahead Of US PPI Data EUR/JPY Holds Above 160.50, German HICP Inflation Rises To 2.6% In July EUR/GBP Trades With A Bearish Bias Near 0.8550 After German Inflation Data
