The Oil price is on the rise as uncertainty looms ahead of the OPEC+ meeting, neutralizing the impact of fading Fed rate-cut prospects. This has led to West Texas Intermediate (WTI) futures moving higher towards a weekly high near $79.25, extending its winning streak for the third trading session. Investors are cautious of potential further reductions in Oil supply if OPEC members decide to extend the current cut of two million barrels per day during the upcoming meeting on June 2. This has caused concerns about supply in an already tight market, leading to an increase in Oil prices.
On the other hand, the speculation for a Fed rate cut in the September meeting has decreased significantly, with investors now expecting a reduction in borrowing rates to start in the last quarter of the year. The soft United States (US) Consumer Price Index (CPI) report for April failed to build confidence among policymakers, resulting in traders scaling back their rate-cut bets. Despite the declining Fed rate-cut prospects, the US Dollar has failed to gain strength, with the US Dollar Index (DXY) extending its downside.
Looking ahead, investors will be focusing on the US core Personal Consumption Expenditure Price Index (PCE) data for April, set to be published on Friday. The Fed’s preferred inflation measure is expected to show steady growth on both a monthly and annual basis, weakening the case for Fed rate cuts in September even further. This data will play a crucial role in shaping the market sentiment and determining the future direction of the US Dollar and Oil prices.
