WTI holds below $80.85 on firmer US Dollar, markets weigh Russian supply woes

Western Texas Intermediate (WTI), the US crude oil benchmark, is trading around $80.85 on Wednesday. WTI prices edge lower amid the modest rebound of US Dollar (USD) and mixed reaction to the loss of Russian refinery capacity after recent Ukrainian n attacks.

Refinery disruptions in Russia caused by Ukrainian drone attacks raised concern over global oil supply. Analysts forecast that these disruptions affected around 12% of Russia's total oil processing capacity. The geopolitical factors are likely to play a key role in WTI prices and the escalating tension in both the Middle East and Russia-Ukraine might lift the black gold. 

Furthermore, the Organisation of Petroleum Exporting Countries and its allies (OPEC+) are set to affirm its production cuts policy amid tensions in the Middle East and Russia. It’s worth noting that when OPEC+ lowers supply when demand falls, WTI prices tend to rise.

Additionally, the uptick of WTI prices is supported by the softer USD which typically makes oil cheaper for buyers holding other currencies. The expectation of interest rate cuts by the US Federal Reserve (Fed) this year provides some support to WTI prices. The Fed Chairman Jerome Powell reiterated last week that policymakers plan to cut rates before the end of this year, given economic growth continues.

Market players will closely watch the US February Personal Consumption Expenditures Price Index (PCE) data, due on Friday. If the report shows stronger-than-expected readings, this could delay the expectation of rate cuts from the Fed this year and cap the upside of the WTI prices. Federal Funds Futures have priced in a 74.5% chance that the Fed will cut rates in the June meeting, according to CME Group's FedWatch tool.