- WTI gains traction for the second consecutive day near $90.65.
- Higher-for-longer rate narrative in the US capped the upside for WTI prices.
- Voluntary oil output cuts by Saudi Arabia and Russia boost oil prices.
- Market players will monitor EIA weekly Crude Oil Stock ahead of the US consumer inflation data.
Western Texas Intermediate (WTI), the US crude oil benchmark, is trading around $90.65 so far on Wednesday. WTI recovers its lost ground as expectations of a tightening supply outweigh concerns that an uncertain economic outlook will dampen demand.
Following the Federal Reserve (Fed) held the interest rate steady and made hawkish comments last week, the higher-for-longer rate narrative in the US capped the upside for WTI prices. It’s worth noting that higher interest rates raise borrowing costs, which can slow the economy and diminish oil demand.
In addition, the uptick of the US Dollar (USD) also contributes to the decline in oil prices, as a stronger dollar makes oil more expensive for holders of other currencies, thereby reducing demand.
About the data, the American Petroleum Institute (API) reported on Wednesday that US crude oil inventories rose by 1.586M barrels for the week ending September 22 from the previous reading of 5.25M barrels drop.
On the other hand, the voluntary oil output cuts by Saudi Arabia and Russia, the world’s two largest oil exporters, lift WTI prices after the two nations announced extended oil output limits through the end of 2023. By the end of 2023, Saudi oil output will be closer to 1.3 million barrels per day through the end of 2023.
Moving on, oil traders will take cues from the EIA weekly Crude Oil Stock for the week ending September 22. Later this week, the US Gross Domestic Product (GDP) Annualized for the second quarter will be due on Thursday and the Core Personal Consumption Expenditure (PCE) Price Index will be released on Friday. These events could significantly impact the USD-denominated WTI price. Oil traders will take cues from the data and find trading opportunities around the WTI prices.