WTI Crude Oil Analysis – 6-June-2024
WTI crude futures climbed above $74.5 per barrel on Thursday, marking a second consecutive day of gains. This rise is seen as a technical rebound after oil prices had recently plummeted to their lowest levels in four months.
The energy market’s upward movement mirrored gains in other risk assets as Treasury yields fell, influenced by weaker-than-expected US jobs data. This data has fueled speculation that the Federal Reserve might cut interest rates twice this year.
WTI Crude Oil Analysis – 6-June-2024
Fed Rate Cut Likelihood at 69%
The likelihood of the Federal Reserve lowering borrowing costs in September now stands at 69%. Such a move could stimulate economic activity, increasing oil demand. This anticipation is providing support to oil prices.
However, the market is also grappling with mixed signals. The Energy Information Administration (EIA) reported that US crude inventories rose by 1.233 million barrels last week. This was a significant turnaround from the previous week’s 4.156 million barrel decline and went against market expectations of a 2.3 million barrel drawdown. This unexpected inventory increase is weighing on oil prices.
OPEC+ Extends Supply Cuts to 2025
Additionally, earlier in the week, oil prices were pressured by news from OPEC+. The organization agreed to extend most of its supply cuts into 2025 but will gradually unwind voluntary cuts from eight member countries starting in October. This decision has created uncertainty about future supply levels.
Summary
In summary, while WTI crude futures are rising due to technical factors and interest rate cut expectations, the market remains volatile with inventory increases and OPEC+ decisions influencing prices. Investors should stay informed about these developments to make well-rounded decisions.
