Western Texas Intermediate (WTI), the US crude oil benchmark, is trading around the $79.20 mark so far this Thursday. WTI retreats from a three-month high and consolidates its recent gains following the decreasing US crude oil stockpiles and the outcome of the Federal Reserve (Fed) meeting.
According to data from the U.S. Energy Information Administration (EIA), US crude inventories decreased by 600,000 barrels in the week ended July 21, compared to forecasts of a 2.35 million barrel decrease.
Apart from the data, the Federal Open Market Committee (FOMC) hiked its interest rate by 25 basis points (bps) to a target range of 5.25%–5.5%. Fed Chairman Jerome Powell stated following the rate decision that the FOMC will assess the totality of incoming data, along with its implications for economic activity and inflation. He added that it's possible to raise the Fed funds rate again at the September meeting if the data warrants it. It’s worth noting that higher interest rates increase borrowing costs, which can slow the economy and diminish oil demand.
Meanwhile, concern is high over whether China, also the world's second-biggest oil consumer, will deliver on its policy pledges. On Tuesday, Chinese news agency Xinhua reported that Chinese policymakers would take up economic policy adjustments, strengthening confidence and mitigating risks.
Nevertheless, Deputy Prime Minister Alexander Novak told reporters that Russia's projection to produce 515 million metric tonnes of crude in 2023 remains subject to reduction decisions. Additionally, Energy Minister Nkolai Shulginov told Tass news agency that Russian 2023 oil output might reach 515 million metric tonnes, depending on the OPEC+ quota decision. He added that the output in 2022 stood at 535 million metric tonnes, a 2 percent year-on-year rise.
Moving on, oil traders will keep an eye on US Advance GDP QoQ, and the core Personal Consumption Expenditure (PCE) Price Index MoM for fresh impetus. This key event could significantly impact the USD-denominated WTI price.
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