WTI climbs as the US Dollar weakened on a dovish Fed rate hike
- The US Federal Reserve’s 25 bps rate hike undermined the US Dollar.
- WTI shrugged off the rise in US oil inventories to a 22-month high.
- OPEC+ countries would likely adhere to its output cut of 2 million barrels daily.
Western Texas Intermediate (WTI), the US crude oil benchmark, rises 0.17% as Thursday’s Asian session begins. On Wednesday, the black gold advanced 0.59% to $68.94 a barrel as New York finished its session. However, WTI is pushing for a second attempt in the week, above the $70.00 a barrel. At the time of writing, WTI exchanges hands at $70.02.
WTI advanced steadily, boosted by a soft US Dollar
Wall Street finished the session with losses. The US Federal Reserve (Fed) decided to lift rates a quarter of a percentage point, as estimated, though it remained worried about inflation and the tightness of the labor market. However, Powell and Co. backpedaled against a 50 bps hike and removed the phrase “ongoing increases” that might be “appropriate” from the monetary policy statement.
That sent US Treasury bond yields collapsing and undermining the greenback. The US Dollar Index (DXY), a measure of the buck’s value vs. a basket of six currencies, falls 0.66%, at 102.533. That helped the US Dollar denominated commodity by making crude cheaper for buyers that use other currencies but the US Dollar.
Although oil rallied, it was capped by weekly data revealed by the US Energy Information Administration (EIA) agency, which showed that US stockpiles rose by 1.1 million in the last week.
Since December, US inventories have grown to their highest level since May 2021.
The Organization of the Petroleum Exporting Countries (OPEC) and its partners, such as Russia, who are collectively known as OPEC+, are expected to continue with its agreement to reduce oil production by 2 million barrels per day until the year-end, even though there has been a significant drop in the price of crude oil, according to three representatives from OPEC.
WTI Technical levels