West Texas Intermediate (WTI) crude oil prices experienced a volatile session on Wednesday, initially surging to a new June peak around $79.00 per barrel before retreating below $78.00. The retreat followed the Energy Information Administration’s (EIA) report of an unexpected increase in US crude oil inventories, coupled with the Federal Reserve’s decision to maintain interest rates.
Federal Reserve Chairman Jerome Powell’s cautious remarks regarding the outlook for rate cuts contributed to market uncertainty. Powell emphasized that significant progress in inflation is necessary before the Fed considers reducing rates. The Federal Open Market Committee (FOMC), in its Summary of Economic Projections (SEP), indicated a tempered expectation for rate cuts, projecting a single quarter-point reduction in 2024 according to the median forecast.
Market sentiment initially leaned bullish early Wednesday after the US Consumer Price Index (CPI) data for May showed inflation cooling more than anticipated. Headline CPI remained flat month-over-month, diverging from the expected slight decrease, while year-over-year core CPI eased to 3.4%, below the forecasted 3.5%. However, hopes for a September rate cut, which had soared to over 70% during early US trading, waned as the Fed’s cautious stance took precedence.
The EIA’s latest report revealed a surprise uptick in US crude oil inventories, with stocks increasing by 3.73 million barrels for the week ending June 7, following a previous rise of 1.233 million barrels and defying expectations of a 1.55 million barrel contraction.
From a technical standpoint, WTI approached $79.00 per barrel before encountering resistance from a descending trendline originating from this year’s peak at $87.12. Downside pressure was tempered by support near the 200-hour Exponential Moving Average (EMA) at approximately $76.60, suggesting potential limitations on further declines.
Wednesday’s bullish momentum was hindered by strong resistance at the 200-day EMA around $78.83, indicating that any recovery from recent lows near $72.45 could face renewed downward pressure in the near term.
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