WTI steady at $80.60, below YTD peak

Crude oil prices for the benchmark West Texas Intermediate (WTI) are oscillating in a narrow range, just above the mid-$80.00s in Asian trading on Friday and remain well within striking distance of the highest level since November 6 seen the previous day.

The hotter-than-expected US Producer Price Index (PPI) suggested that the Federal Reserve might stick to its higher-for-longer interest rates narrative to bring down inflation. This is expected to hamper economic activity and dent fuel demand, which, along with concerns about a slowdown in China, acts as a headwind for crude oil prices.

The downside, however, remains cushioned in the wake of a sharp decline in US inventories, drone strikes on Russian refineries and a rise in energy demand forecasts.

The Energy Information Administration (EIA) reported on Wednesday that US crude stockpiles unexpectedly shrank by about 1.5 million barrels in the week to March 8.

Meanwhile, one of the most serious drone attacks by Ukraine against Russia’s energy sector in recent months caused a fire at Rosneft’s biggest refinery on Wednesday.

Moreover, the International Energy Agency raised its view on 2024 oil demand growth for a fourth time since November amid supply disruptions caused by Houthi attacks in the Red Sea.

This comes after OPEC+ members decided to extend the production cuts of 2.2 million barrels per day through the second quarter and support prospects for a further appreciating move for crude oil prices.

Nevertheless, the black gold remains on track to register strong weekly gains as the market focus now shifts to the highly-anticipated two-day FOMC monetary policy meeting starting next Tuesday.

(Source: OANDA)