WTI holds below $90.00, retracing from 10-month highs amid profit-taking
- WTI loses traction near $89.45 after reaching 10-month highs.
- The higher for longer rate narrative in the US could weigh on WTI prices.
- Voluntary oil output cut by Saudi Arabia and Russia limits the downside of oil prices.
- The highly-anticipated Federal Reserve (Fed) meeting will be in the spotlight.
Western Texas Intermediate (WTI), the US crude oil benchmark, is trading around $89.45 so far on Wednesday. WTI prices lose momentum after hitting the highest level since November 2022 of $93.75. WTI prices face some selling pressure due to profit-taking by traders ahead of the Federal Reserve (Fed) interest rate decision.
The Fed is widely expected to hold the interest rate unchanged in the 5.25% to 5.5% range on Wednesday’s meeting. Market players will keep an eye on the Press Conference Chairman Jerome Powell. If Powell delivers hawkish comments and convinces the higher for longer interest rate narrative in the US. This might exert pressure on the WTI prices. It’s worth noting that higher interest rates raise borrowing costs, which can slow the economy and diminish oil demand.
On the other hand, voluntary oil output cuts by Saudi Arabia and Russia boost WTI prices. That said, the world’s two largest oil exporters announced prolonged oil output curbs until the end of 2023. Through the end of 2023, Saudi oil output will be closer to 1.3 million barrels per day. Additionally, the International Energy Agency (IEA) warned earlier this week that oil market deficits would worsen in the fourth quarter with the summer-announced oil production cuts by Saudi Arabia and Russia exacerbating the situation.
About the data, US crude oil inventories fell nearly 5.25M barrels for the week ending September 15 from the previous reading of 1.174M barrels rise, the American Petroleum Institute (API) reported on Wednesday. The market consensus expected a 2.7 million-barrel decline
Oil traders will monitor the EIA Crude Oil Stocks for the week ending September 15 due on Wednesday. The attention will shift to the Fed meeting at 18:00 GMT. These events could significantly impact the USD-denominated WTI price. Oil traders will take cues from the data and find trading opportunities around the WTI prices.