WTI holds below $72.00 as wider Middle East conflict fade

• WTI price trades in negative territory for the fifth consecutive day in Wednesday’s early Asian session.
• WTI price declines as worries of a wider Middle East conflict fade, but rising bets on a Fed rate cut might limit its losses. 
• Crude inventories fell by 4.65 million barrels to 426.03 million last week, according to the EIA. 

West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $71.70 on Thursday. WTI price edges lower on the back of easing fears of a wider Middle East war. However, firmer expectations of the Federal Reserve (Fed) rate cut in September after the FOMC Minutes might cap its downside. 

WTI prices have edged lower as Iran has refrained so far from attacking Israel in response to the killing of a senior Hamas leader in Tehran in late July. The United States hoped that a cease-fire in Gaza would prevent a wider war in the region. "Oil prices are falling, extending losses from the previous week amid ongoing concern over demand in China and amid progress in Middle Eastern ceasefire talks," said City Index analyst Fiona Cincotta.

On the other hand, a decline in US oil inventories and the minutes from the US Fed indicating a likely September rate cut might lift the black gold. The US crude inventories hit a seven-month low last week. According to the Energy Information Administration (EIA), crude oil stockpiles in the United States for the week ending August 21 fell by 4.65 million barrels to 426.03 million, compared to an increase of 1.36 million barrels in the previous week. The market consensus estimated that stocks would decline by 2.8 million barrels.

According to the Fed minutes of the July 30-31 meeting, “the vast majority” of participants indicated that it would likely be appropriate to ease policy at the next meeting if the data continued to meet expectations. 

Oil traders will monitor the preliminary US S&P Global Purchasing Managers Index (PMI) for August for fresh impetus. The attention will shift to Fed Chair Jerome Powell’s speech at Jackson Hole on Friday, which might offer some hints about interest rate plans in the future.