WTI attracts some buyers to nearly five-month high of $85.00, Middle East tensions rise

Western Texas Intermediate (WTI), the US crude oil benchmark, is trading around $84.85, the highest since October 2023 on Wednesday. The uptick in WTI prices is bolstered by the weaker US Dollar (USD), and the supply fears amid the geopolitical uncertainties. 

The escalating geopolitical tensions in the Middle East and Russia-Ukrain, such as the Israeli airstrike on an Iranian embassy in Syria on Monday, the ongoing Ukrainian attacks on Russian refineries, and the Houthi attacks on shipping in the Red Sea, raise fear of further tightening supplies, which boost WTI prices. 

Oil traders will monitor the Joint OPEC/non-OPEC Ministerial Monitoring Committee (JMMC) meeting on Wednesday. The markets expect the OPEC+ committee to extend voluntary cuts for the second quarter of the year.

Apart from this, crude oil inventories in the US for the week ending March 29 fell by 2.286 million barrels from a 9.337 million barrel jump in the previous week, according to the American Petroleum Institute (API) on Tuesday.

Furthermore, the softer Greenback amid the growing speculation on rate cuts from the Fed also provides some support for WTI prices. Futures traders anticipate the US Fed to start easing in the June meeting and to cut by three-quarters of a percentage point by the end of the year. A weaker USD lifts WTI prices as it makes dollar-denominated oil more cheaper for holders of other currencies, boosting oil demand. 

Market players will closely watch Fedspeak on Wednesday. The Fed's Bowman, Goolsbee, Barr, Kugler, and Powell are set to speak later in the day. If they deliver any hawkish comments, the US Dollar could attract some buyers, which might cap the WTI’s upside.