WTI gains ground on projections of reduced borrowing costs, hovers around $70.00

West Texas Intermediate (WTI) price seems to extend its gains for the second consecutive day, trading higher around $70.00 per barrel during the Asian session on Thursday. The Crude oil prices gained ground after the release of the US EIA Crude Oil Stocks Change for the week ending on December 8, along with the Federal Reserve’s (Fed) Interest Rate Decision to hold interest rates at 5.5% as widely expected.

EIA Crude Oil stockpiles are withdrawn by 4.259 million barrels more than the expected withdrawal of 0.65 million barrels.

The WTI price experienced an uptick in the aftermath of the Federal Reserve (Fed) meeting, where market expectations are now leaning towards three rate cuts for 2024. Fed Chair Jerome Powell's dovish stance has fueled sentiments that lower interest rates can reduce borrowing costs, potentially boosting economic growth and, consequently, Oil demand.

Adding to the dynamics, the attack on a Norwegian commercial tanker by Yemen's Houthis has heightened concerns about supply disruptions in the Middle East. The warning from Yemeni Houthi forces, advising ships to avoid traveling to Israel, adds a geopolitical element that might have impacted the Crude oil prices.

The positive sentiment surrounding economic activities in the United States (US) faces a potential setback due to the November release of downbeat Producer Price Index (PPI) data. This could contribute to a reduction in the consumption of Crude oil products. According to the US Bureau of Labor Statistics, the PPI (YoY) growth slowed to 0.9%, falling short of the expected 1.0%, while the Core PPI registered 2.0%, below the anticipated 2.2%.

Market participants are now turning their attention to the upcoming release of US Retail Sales data on Thursday, seeking further insights into the state of the US economy.