- WTI surged to $78.00 per barrel on Wednesday.
- The US Energy Information Administration (EIA) has once again reported a decrease in the country’s stockpiles of crude oil.
- Markets receive additional support as there is a possibility of a Federal Reserve interest rate reduction in September.
On Wednesday, the price of West Texas Intermediate (WTI) US Crude Oil surged to $78.00 per barrel. This increase was driven by the Energy Information Administration (EIA) announcing a larger-than-anticipated drop in US Crude Oil Stocks Change.
This further contributes to the recent decrease in the number of barrels in the US. The Federal Reserve (Fed) maintained interest rates at their current levels, which was in line with market expectations. Looking ahead, there is a possibility of a rate cut in September, which has positively influenced market sentiment towards commodities.
The EIA reported that US Crude Oil Stocks Change for the week ended July 26 decreased by -3.436 million barrels, which was significantly lower than the predicted decline of -1.6 million barrels. This adds to the previous week’s decrease of -3.471 million barrels in US Crude Oil supplies. The EIA pointed out that US Crude Oil production declined in May, marking the first decrease since January. However, it also emphasized that US exports of fossil fuel and petroleum products reached their highest levels since August of 2023.
The Federal Reserve maintained its current interest rates during the July rate call, which was in line with market expectations. Fed Chairman Jerome Powell’s cautiously optimistic remarks further boosted market confidence, leading to increased risk appetite. Powell also outlined the desired outcomes in key data releases leading up to the September 18 rate call. The Federal Reserve is eagerly awaiting the latest round of inflation data to validate the trajectory of price growth towards the desired 2% annual target, alongside ongoing improvements in US labor figures.
In addition, when it was revealed that the chief of the Iranian Hezbollah military had been murdered this week, there was a rise in the amount of risk aversion regarding crude oil on Wednesday. As a form of reprisal, some allegations imply that Iranian officials are lobbying for a military reaction against Israel. These accusations are based on sources that are not officially affiliated with Iran. By taking this measure, Iran would get further involved in the war that is now taking place between Israel and Palestine. A rise in the number of people participating in the battle in Gaza would have a substantial influence on the markets for crude oil throughout the world.
Technical Analysis of WTI
WTI US Crude Oil made a strong comeback on Wednesday, surging 5% from Tuesday’s low point of $74.24, which was the weakest in eight weeks. During an impressive and rapid rebound, WTI surpassed the $78.00 mark.
US Crude Oil continues to show weakness despite a slight recovery attempt on Wednesday. It is currently trading near the lower end of the 200-day Exponential Moving Average (EMA), just above $79.00. The price action has been dominated by bearish sentiment, with WTI closing in the red for all but four of the last 18 consecutive trading days.