WTI stays timid around $78.00 ahead of US PPI

• WTI Oil price remains steady ahead of the release of US producer price figures on Thursday.
• Oil prices may weaken as higher interest rates dampen the economic growth in the United States.
• Crude Oil prices faced a challenge as US crude inventories increased by 3.7 million barrels against the 1.55 million-barrel decline.

West Texas Intermediate (WTI) Oil price remains steady with thin trading, possibly due to anticipation of upcoming producer price figures from the United States (US). WTI Oil price hovers around $78.00 per barrel during the European session on Thursday.

Oil traders have absorbed the hawkish stance maintained by the US Federal Reserve (Fed). The Federal Open Market Committee (FOMC) kept its benchmark lending rate within the range of 5.25%–5.50% for the seventh consecutive time during its June meeting on Wednesday, as widely anticipated. Higher interest rates could hinder economic growth, which in turn negatively impacts Oil demand.

Fed Chair Jerome Powell said in a press conference following the Fed's decision that the restrictive stance on monetary policy is having the expected effect on inflation. "So far this year, we have not gained greater confidence on inflation to warrant a rate cut," Powell added.

On the supply side, higher US crude Oil stockpiles put pressure on the price of the liquid Gold. Official data released by the Energy Information Administration (EIA) on Wednesday showed that US crude inventories increased by 3.7 million barrels in the week ending June 7. This contrasts with market expectations of a 1.55 million barrel decline, following the previous week's increase of 1.233 million barrels. Additionally, the EIA, in its monthly report, reduced its forecast for Oil demand growth in 2024 by 100,000 barrels per day (bpd), bringing the new estimate to 960,000 bpd.

In the Middle East, attention is focused on ceasefire talks in Gaza. Any success could alleviate concerns about potential supply disruptions from the Oil-producing region. In the latest incident affecting maritime security, Iran-allied Houthi militants claimed responsibility for small watercraft and missile attacks on Wednesday. These attacks left a Greek-owned coal carrier in need of rescue near Yemen's Red Sea port of Hodeidah, according to Reuters.