WTI crude oil futures have edged higher, trading above the 50-day moving average of $69.89. Market participants are cautiously attempting to establish a support level, as failure to maintain it may signal a bearish reversal.
Traders are closely monitoring the Federal Reserve's rate decision, with a 95.4% probability of a 25 basis point rate cut. Investors seek clues from economic forecasts and the "dot plot" for monetary policy direction before 2025 and 2026. Lower rates typically boost economic growth and oil demand, though uncertainties about future rate cuts and inflation concerns linked to U.S. policy limit price increases.
The American Petroleum Institute (API) reported a significant drop in U.S. crude inventories by 4.69 million barrels, exceeding the expected 1.6 million barrels, supporting oil prices. However, gasoline and distillate stocks rose by 2.45 million and 744,000 barrels, respectively. Official data from the U.S. Energy Information Administration (EIA) will provide clearer inventory levels and their impact on supply and demand trends.
Geopolitical risks add uncertainty as the EU and the UK impose sanctions on Russian oil transport fleets. Although these sanctions have not severely disrupted Russia's role in the global oil market, they introduce supply uncertainty and potential volatility.
WTI crude oil prices remain resilient, supported by inventory reductions and expectations of economic support from low rates. However, upward momentum is limited due to mixed sentiment from Fed policy predictions. Traders should prepare for potential volatility following the Fed's statement and EIA inventory data release.