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- WTI price edges higher to near $58.15 in Tuesday’s Asian session.
- The anticipation that the Fed may opt for an interest rate cut in December underpins the WTI price.
- US crude oil inventories dropped by 1.9 million barrels last week, said API.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $58.15 during the Asian trading hours on Wednesday. The WTI edges higher on the prospect of the US Federal Reserve (Fed) rate reduction and a weaker US Dollar (USD) broadly. Traders brace for the release of the Energy Information Administration (EIA) crude oil stockpiles report later on Wednesday.
The USD edges lower as traders increase their bets on a US interest rate cut at December’s policy meeting. This provides some support to the USD-denominated commodity price as it makes oil cheaper for foreign buyers.
Data released by Automatic Data Processing Inc. (ADP) on Tuesday showed that private companies shed an average of 13,500 jobs over the past four weeks, indicating further signs of a weakening US labor market. According to the CME FedWatch tool, markets have priced in nearly an 85% chance of a quarter percentage point cut from the Fed in December, up from 80% odds earlier this week.
On the other hand, the potential upside for the WTI price might be limited due to progress toward the Russia-Ukraine peace deal. Reuters reported on Wednesday that Ukrainian President Volodymyr Zelenskiy could visit the US in the next few days to finalize an agreement with US President Donald Trump to end the war.
Data released by the American Petroleum Institute (API) on Tuesday showed that crude oil stockpiles in the US for the week ending November 21 declined by 1.9 million barrels compared to a rise of 4.4 million barrels in the previous week. Crude oil inventories in the US are so far showing a net gain of 7.4 million barrels for the year, according to Oilprice calculations of API data.
