WTI nears week high, caution ahead of OPEC+ meeting

West Texas Intermediate (WTI) futures on NYMEX were moving higher towards a weekly high near $79.25 in Tuesday’s European trading.

The crude oil price extended its winning streak for the third trading session as uncertainty among investors ahead of the OPEC+ meeting scheduled for June 2 offsets the impact of easing bets leanινγ towards the Federal Reserve reducing interest rates from the September meeting.

Investors caution that οil supply could reduce further if OPEC members extend the current cut of 2 million barrels per day. This will uplift crude prices due to supply concerns in an already tight market.

Meanwhile, market speculation for a Fed rate cut in the September meeting has diminished significantly and investors now expect that the U.S. central bank will start reducing borrowing rates in the last quarter of this year.

The failure of soft US Consumer Price Index (CPI) report for April in building confidence among policymakers that the progress in the disinflation process has resumed after stalling for straight three months has forced traders to pare rate-cut bets.

A sharp decline in Fed rate-cut prospects has failed to uplift the US Dollar. The DXY Dollar Index, which tracks the Greenback’s value against six major currencies, extended its downside to 104.40.

Going forward, investors will focus on the US core Personal Consumption Expenditure Price Index (PCE) data for April, which will be published on Friday. The Fed’s preferred inflation measure is estimated to have grown steadily on a monthly and annual basis at 0.3% and 2.8%, respectively. This would further weaken the case for Fed rate cuts in September.

(Source: OANDA)