WTI snaps its three-week winning streak, holds below $90.00 amid Fed’s hawkish stance, USD demand
- WTI struggles to gain and hovers around $89.25 as the USD attracts some buyers.
- Higher for longer rate narrative in the US weigh on WTI prices.
- Traders will monitor the weekly Crude Oil Stock, the US Core Personal Consumption Expenditure (PCE) Price Index for fresh impetus.
Western Texas Intermediate (WTI), the US crude oil benchmark, is trading around the $89.25 mark so far on Tuesday. WTI prices snap their three-week winning streak as investors concerned about higher interest rates and oil demand outlook,
The higher-for-longer rate narrative in the US caps the upside for WTI prices after the Federal Reserve (Fed) held the interest rate unchanged and delivered hawkish comments last week. It's worth noting that higher interest rates raise borrowing costs, which can slow the economy and diminish oil demand. Additionally, the stronger US Dollar (USD) is another factor contributing to the decline in oil prices, as a stronger greenback makes oil more expensive for holders of other currencies, thereby reducing demand.
On the other hand, Saudi Arabia and Russia, the world's two largest oil exporters boosted WTI prices as two nations announced prolonged oil output curbs until the end of 2023. Saudi oil output will be closer to 1.3 million barrels per day through the end of 2023. Furthermore, Russia's temporary ban on gasoline and diesel exports to the majority of nations, announced last week, was anticipated to significantly tighten supply.
Looking ahead, oil traders will take cues from the API and EIA weekly Crude Oil Stock for the week ending September 22. The US Consumer Confidence for September and housing data will be due later on Tuesday. Later this week, the US Gross Domestic Product (GDP) Annualized for the second quarter will be due on Thursday and the Core Personal Consumption Expenditure (PCE) Price Index will be released on Friday. 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.