WTI drops to near $79.00 ahead of key US economic releases

West Texas Intermediate (WTI) crude Oil dipped slightly to around $79.00 per barrel in the Asian trading session on Thursday. Traders keep an eye out for the US crude Oil Stocks Change report from the Energy Information Administration later today. Market projections suggested that US energy firms would draw down 1.9 million barrels of crude from storage in the week ending May 24, following the addition of 1.825 million barrels the week before. In the previous week, the API Weekly Crude Oil Stock indicated a decrease of 6.49 million barrels, contrasting with the 2.48 million barrels added in the week prior.

Traders are also awaiting the upcoming meeting of the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia (OPEC+), scheduled for June 2. During this meeting, member producers will discuss prolonging voluntary output cuts of 2.2 million barrels per day into the latter half of 2024. It's anticipated that the group will opt to maintain supply cuts.

Hawkish remarks from Minneapolis Fed President Neel Kashkari further fueled concerns about potential rate hikes. Higher interest rates are negatively impacting the US economic outlook, which dampens the WTI price.

Reuters reported that Neel Kashkari, President of the Federal Reserve Bank of Minneapolis, hinted at the possibility of a rate hike. Kashkari remarked, “I don’t believe anyone has completely ruled out the option of increasing rates,” expressing doubts about the disinflationary trend.

The US Dollar's strength is bolstered by rising Treasury yields, driven by investor risk aversion as they adopt a cautious approach prior to the release of US Gross Domestic Product Annualized (Q1) data on Thursday and the Core Personal Consumption Expenditures (PCE) Price Index data scheduled for Friday. With the US Dollar gaining strength, Oil becomes more expensive for countries purchasing it with other currencies.