WTI Steady Above $71.50 as API Report Draws Crude Oil Inventories
West Texas Intermediate (WTI), the US crude oil benchmark, was trading around $71.60 on Thursday (02/01). WTI prices were trading with slight gains after the American Petroleum Institute (API) weekly report showed that US crude oil inventories continued to decline.
A decline in US crude oil inventories last week provided some support to WTI. The API weekly report showed that crude oil inventories in the United States for the week ended December 27 fell by 1.442 million barrels, compared with a decline of 3.2 million barrels in the previous week. Market consensus had expected inventories to fall by 3.0 million barrels. Furthermore, rising geopolitical tensions in the Middle East and the ongoing Russia-Ukraine conflict could boost WTI prices in the near term.
On the other hand, expectations that the US Federal Reserve (Fed) will slow the pace of interest rate cuts in 2025 due to stubbornly high inflation may limit the upside of the black gold. Fed officials indicated that interest rates may only be cut twice by 2025. This, in turn, boosted the greenback and put selling pressure on USD-denominated commodities as it makes oil more expensive in other countries, which could dampen demand.
The latest data released on Thursday showed that China’s factory activity slowed its pace of expansion and was weaker than expected in December. The reading raised concerns over a slowing economic recovery and weak demand in the world’s second-largest economy, which could drag WTI prices lower.
Source: FXStreet
