WTI consolidates gains above $76.60 ahead of FOMC

Western Texas Intermediate (WTI), the US crude oil benchmark, is trading around the $76.65 mark so far this Friday. WTI consolidates its recent gain after ending its fourth weekly gain on Friday amid signs of a tighter oil market. 

About the Russia-Ukraine headline, Russia attacked Ukrainian food export facilities for the fourth consecutive day on Friday and practiced seizing ships in the Black Sea, according to Reuters. The escalating tensions between Russia-Ukraine support the WTI price.

Talking about the data, the Energy Information Administration (EIA) reported last week that the EIA Crude Oil Stocks Change in the week ending July 14 fell by 708,000 barrels, compared to expectations of a drop of 2.44 million barrels and a gain of 5.946 million barrels the previous week.

Meanwhile, Baker Hughes revealed that the number of oil rigs in the United States dropped by seven this week, the most since early June. The number of active oil rigs in the United States has dropped to its lowest level since March 2022, at 530. The Baker Hughes rig count data adds to supply-side concerns and helps drive crude oil price gains.

Additionally, China’s Commerce Ministry stated earlier last week that a series of measures will help boost the consumption of household consumer goods and services consumption. This, in turn, supports further upside in the WTI price. 

On the other hand, the upside for WTI seems limited as market participants await the Federal Reserve's (Fed) monetary policy decision on Wednesday. The market prices in a 25 basis point rate (bps) hike. However, investors are repricing another Fed rate increase after the July meeting, causing the Greenback to rebound. The anticipation for the Fed to raise rates after the July meeting increased to 28% from 15.9% last month, according to the CME FedWatch Tool, showing traders are changing their views on Fed monetary policy. It’s worth noting that higher interest rates raise borrowing costs, which can slow the economy and diminish oil demand. 

Oil traders will keep an eye on the Federal Open Market Committee (FOMC) meeting and Fed Chairman Jerome Powell's press conference. This event could significantly impact the USD-denominated WTI price. Apart from the FOMC announcement, traders will take cues from US CB Consumer Confidence, Advance GDP QoQ, and the Fed’s preferred measure of inflation, the core Personal Consumption Expenditure (PCE) Price Index MoM.