WTI rises to near $69.50, upside seems limited due to subdued response after Fed decision

• WTI price gains ground but the overall market response has been relatively muted following the Fed rate cut.
• The Federal Open Market Committee reduced the federal funds rate to a range of 4.75% to 5.0%.
• US Crude Oil Stocks Change decreased by 1.63 million barrels the previous week, far exceeding the expected draw of 0.1 million barrels.

West Texas Intermediate (WTI) Oil price retraces its recent losses from the previous session, trading around $69.50 per barrel during the Asian hours on Thursday. The US Federal Reserve’s (Fed) decision to cut interest rates by 50 basis points, more than anticipated, provided support to Oil prices, though the overall market response has been relatively muted.

According to a Reuters report, ANZ analysts commented in a note, "The 50 basis point cut suggests significant economic challenges ahead, but bearish investors were left disappointed as the Fed also raised its medium-term outlook for rates."

The Federal Open Market Committee (FOMC) reduced the federal funds rate to a range of 4.75% to 5.0%, marking the Fed’s first rate cut in over four years. This decision underscores the Fed’s dedication to protecting the labor market and preventing the economy from slipping into recession. Lower borrowing costs could enhance the economic outlook in the United States, the world’s largest crude consumer, potentially supporting Oil demand.

Fed Chair Jerome Powell stated during a press conference after the monetary policy meeting, “This decision signifies our increased confidence that, with the right adjustment to our policy approach, we can sustain a strong labor market while achieving moderate economic growth and bringing inflation down to a sustainable 2% level.”

Additionally, WTI Oil prices may have found support after the US Energy Information Administration (EIA) reported a larger-than-expected decline in Crude Oil Stocks Change, which dropped by 1.63 million barrels to 417.5 million, far exceeding the forecasted 0.1 million-barrel draw for the week ending September 13. This swings from a previous stock increase of 0.833 million barrels.