On Wednesday, West Texas Intermediate (WTI) US Crude Oil soared to $78.00 per barrel following a larger-than-expected decline in US Crude Oil inventories reported by the Energy Information Administration (EIA). The potential for a Federal Reserve (Fed) rate cut in September also boosted market sentiment towards commodities.
The EIA revealed that US Crude Oil Stocks Change for the week ended July 26 dropped by -3.436 million barrels, surpassing the forecasted -1.6 million barrel decline. This decrease added to the previous week’s -3.471 million contraction in US Crude Oil supplies. Despite a drop in US Crude Oil output in May, the EIA noted that US petroleum product supplies reached their highest levels since August 2023.
The Fed kept interest rates unchanged in July, as expected by the market. Fed Chairman Jerome Powell’s positive remarks outlined the criteria the Fed is looking for before considering a rate cut in September. The Fed is monitoring inflation data and US labor figures for signs of economic stability.
In other news, Crude Oil markets experienced increased risk aversion following reports of the assassination of the leader of the Iranian Hezbollah’s air force. This event heightened tensions in the Middle East and could impact global Crude Oil prices.
Technical Analysis of WTI Crude Oil
WTI Crude Oil rebounded strongly on Wednesday, rising 5% from the previous day’s low of $74.24 to surpass $78.00. Despite the recovery, WTI remains below the 200-day Exponential Moving Average (EMA) at around $79.00.
On the hourly and daily charts, WTI Crude Oil shows signs of a bullish momentum shift, but the overall trend remains bearish with consistent declines in recent trading sessions.
Understanding WTI Crude Oil
WTI Crude Oil is a high-quality type of Crude Oil traded on international markets. It is known for its low gravity and sulfur content, making it easily refined. Factors such as global demand, political instability, OPEC decisions, and the value of the US Dollar influence WTI Crude Oil prices.
Weekly inventory reports from the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact WTI prices by reflecting changes in supply and demand. OPEC’s production decisions also play a significant role in determining WTI Crude Oil prices.
Overall, the surge in WTI Crude Oil prices is driven by a combination of inventory drawdowns, Fed rate cut expectations, and geopolitical tensions. Investors should monitor key economic indicators and global events to make informed decisions about their investments in the Crude Oil market.