- WTI loses momentum below $81.70, losing 0.56% for the day.
- WTI prices edge lower due to the hawkish comments from Federal Reserve (Fed) policymakers.
- Saudi Arabia and Russia’s voluntary oil output cuts might cap the downside for WTI.
- Oil traders await Chinese, US inflation data for fresh impetus.
Western Texas Intermediate (WTI), the US crude oil benchmark, is trading around the $81.70 mark so far on Tuesday. WTI loses traction after six straight weekly gains. The Federal Reserve (Fed) policymakers’ hawkish remarks are supporting the decline in WTI prices.
That said, Atlanta Federal Reserve (Fed) Governor Michelle Bowman indicated on Monday that additional rate hikes will likely be required to return inflation to target levels, per Reuters. Additionally, the President of the New York Fed, John C. Williams, anticipated that interest rates would continue to decline in the coming year. The possibility of rate hikes for the entire year drags WTI prices lower. It’s worth noting that higher interest rates increase borrowing costs, which can slow the economy and diminish oil demand.
In China, the country’s top economic committees announced on Friday that the government will implement additional measures to boost consumer expenditure and enhance local liquidity. However, officials once again provided no significant details on the planned stimulus. The government’s lack of specific plans has dampened investor expectations. The concern about the economic slowdown in China, the world’s second-largest economy, might exert pressure on WTI prices.
On the other hand, the optimistic news about Saudi Arabia and Russia extending a voluntary oil output cut might cap the downside for WTI. That said, Saudi Arabia will extend its voluntary oil output cut of one million barrels per day (bpd) through September. In September, Saudi production is anticipated to be around 9 million bpd. In the meantime, Russia’s oil exports will decrease by 300,000 bps in September, according to Deputy Prime Minister Alexander Novak.
Moving on, oil traders monitor the developments regarding the additional stimulus plan in China. Also, the EIA Crude Oil Stocks Change for the week ending August 4 will be released. The key events to watch are the Consumer Price Index (CPI) and the Producer Price Index (PPI) from the US and China later this week. 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 price.
