WTI steadies above $80 as US Oil buildup offsets Middle East risks

• WTI holds breadth above $80.00 with US core PCE inflation in focus.
• Unexpected Oil buildup in the US intensified demand concerns.
• Israel prepares for massive damage in Lebanon if Hezbollah launches war.

West Texas Intermediate (WTI), futures on NYMEX, remain steady above the psychological support of $80.00 in Thursday’s European session. The upside in the Oil price has been restricted by growing demand concerns as the United States (US) Energy Information Administration (EIA) unexpectedly reported a significant buildup of inventories for the week ending June 21. While the downside remains favored amid caution that Middle East tensions would expand from Gaza to Lebanon.

On Wednesday, the US EIA reported Oil stockpiles at 3.59 million barrels. Economists expected a drawdown at a faster pace by 3.0 million barrels from the former release of 2.55 million barrels. This has raised concerns over the Oil consumption in worlds’ largest nation. Investors worry that maintenance of a restrictive interest rate framework by the Federal Reserve (Fed) from a longer period has deepened household crisis, which has resulted in poor demand prospects.

Going forward, investors will focus on the United States (US) core Personal Consumption Expenditure price index (PCE) data for May, which will be published on Friday. The core PCE inflation data, a Federal Reserve’s (Fed) preferred inflation measure, will provide cues bout when the rate-cutting cycle will be kicked-off.

The US core PCE inflation data is estimated to have grown at a slower pace of 0.1% against 0.2% in April month-on-month. Annually, the underlying inflation is projected to have decelerated to 2.6% from the former release of 2.8%.

On the geopolitical front, Israeli Defense Minister Yoav Gallant warned of a massacre in Lebanon if Hezbollah launches a war. Investors worry that the spread of war from Gaza to Lebanon would disrupt the Oil supply chain.