- The Oil price exhibits a sideways move ahead of US oil inventory data.
- US EIA is expected to show a drawdown in oil inventories for the second straight week.
- Investors await the US core PCE inflation for fresh guidance on interest rates.
West Texas Intermediate (WTI) futures on NYMEX trade close to an eight-week high near $82.00 in Wednesday’s European session. The Oil price has remained bullish for almost three weeks on hopes of strong demand due to severe heatwaves in the Northern Hemisphere amid the summer vacation season. The summer season prompts energy demand, which is favorable for the Oil price.
Apart from the improved demand, oil supply disruptions due to Middle East tensions and the Russia-Ukraine war have also kept the Oil price buoyant. Reuters reported, “The Houthis have so far sunk two vessels and seized another, and said on Tuesday they used a missile to hit a vessel in the Arabian Sea.”
In Wednesday’s session, investors will focus on the United States (US) Energy Information Administration (EIA) crude Oil inventories data for the week ending June 21. The report is expected to show that there was a drawdown in Oil stockpiles by three million barrels.
For the broader demand outlook, investors await the US core Personal Consumption Expenditure price index (PCE) data for May, which will be published on Friday. Annually, the underlying inflation data is estimated to have softened to 2.6% from the prior release of 2.8%, with monthly figures growing at a slower pace of 0.1% from 0.2% in April.
Soft inflation numbers would boost expectations of early rate cuts by the Federal Reserve (Fed). This would eventually improve the Oil price’s appeal as lower interest rates prompt liquidity into the economy.
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