WTI posts modest gains to near $69.50 as US crude stocks fall

• WTI trades with mild gains near $69.50 in Thursday’s Asian session. 
• A cautionary tone by the Fed and Chinese sluggish demand concerns undermine the WTI price. 
• US crude oil stocks fell less than expected last week, according to the EIA. 

West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $69.50 on Thursday. The WTI price posts modest gains as US crude inventories fell and the US Federal Reserve (Fed) lowered its key interest rate by a quarter percentage point on Wednesday. However, the signal that the US central bank would slow the pace of reductions might cap the upside for the black gold. 

The Fed made its third consecutive cut of 2024, reducing the federal funds rate by 25 basis points (bps) at its December meeting on Wednesday. The US central bank signalled it would slow the pace of the easing cycle as sticky inflation and US President-elect Donald Trump's proposed policies could prove inflationary. The Fed officials indicated that it probably would only lower twice more in 2025. This, in turn, lifts the Greenback and exerts some selling pressure on the USD-denominated commodity price as it makes oil more expensive in other countries, which can reduce demand.

Additionally, the concerns about the weakness in consumer spending in China, the world's largest oil importer, could weigh on the WTI price. “Bearish momentum spawned by the China data destroyed any hopes speculators had of breaking out of the two-month range to the upside,” noted Robert Yawger, director of the energy futures division at Mizuho Securities USA. 

A decline in US crude inventories last week might provide some support to the WTI. The Energy Information Administration (EIA) weekly report showed crude oil stockpiles in the United States for the week ending December 13 declined by 934,000 barrels, compared to a fall of 1.7 million barrels in the previous week. The market consensus estimated that stocks would decrease by 1.425 million barrels.