WTI turns red below $80.00, Fed’s hawkish remarks limit gains

Western Texas Intermediate (WTI), the US crude oil benchmark, is trading around $79.90 on Wednesday. The black gold turns red amid renewed US Dollar (USD) demand and the hawkish remarks from the US Federal Reserve (Fed). 

Several Fed officials delivered hawkish remarks in recent weeks after data showed that US inflation is stickier than expected. On Tuesday, Fed Minneapolis President Neel Kashkari said that the central bank should wait for significant progress on inflation before cutting interest rates. The higher-for-longer US interest rate narrative continues to weigh on the black gold as it increases the cost of borrowing, which can dampen economic activity and oil demand.

On the other hand, the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia (OPEC+), will hold a virtual meeting on June 2 to review its production policy. Analysts expect that OPEC+ will maintain crude supply curbs at 2.2 million barrels per day, which might limit the downside for WTI prices.“OPEC+ countries are unlikely to raise production given that the current price of Brent is closer to $80 per barrel than $90 per barrel,” said Deutsche Bank analyst Michael Hsueh.

Early Wednesday, the International Monetary Fund (IMF) upgraded China's 2025 economic growth target to 4.5% from 4.1%. The positive development surrounding China’s economic outlook might lift WTI prices since China accounts for 80% of non-OECD oil consumption, making it the world's biggest oil importer.