WTI approaches weekly high above $79.00 amid caution ahead of OPEC+ meet

• The Oil price extends upside as uncertainty ahead of the OPEC+ meeting neutralizes the impact of fading Fed rate-cut prospects.
• Easing Fed rate-cut bets fail to uplift the US Dollar’s appeal.
• Fed officials believe that slowdown in April’s CPI report won’t be long-lasting.

West Texas Intermediate (WTI), futures on NYMEX, move higher towards weekly high near $79.25 in Tuesday’s European session. The Oil price extends its winning streak for the third trading session as uncertainty among investors ahead of the OPEC+ meeting scheduled for June 2 offsets the impact of easing bets leaned towards the Federal Reserve (Fed) reducing interest rates from the September meeting.

Investors caution that the Oil supply could reduce further if OPEC members extend the current cut of two million barrels per day. This will uplift the Oil prices due to supply concerns in an already tight market.

Meanwhile, market speculation for Fed rate cut in the September meeting has diminished significantly and investors now expect that centra bank will start reducing borrowing rates in the last quarter of this year. The failure of soft United States (US) Consumer Price Index (CPI) report of April in building confidence among policymakers that the progress in the disinflation process has resumed after stalling for straight three months has forced traders to pare rate-cut bets.

A sharp decline in Fed rate-cut prospects has failed to uplift the US Dollar. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, extends its downside to 104.40.

Going forward, investors will focus on the US core Personal Consumption Expenditure Price Index (PCE) data for April, which will be published on Friday. The Fed’s preferred inflation measure is estimated to have grown steadily on monthly and annual basis at 0.3% and 2.8%, respectively. This would weaken the case of Fed rate cuts in September further.