The price of West Texas Intermediate (WTI) US Crude Oil rebounded on Friday, bouncing back above $77.50 after hitting a 12-week low earlier in the day. Despite this recovery, Crude Oil markets are still down for the week by -2.38%. The rebound in oil prices is attributed to a recovery in broad market risk appetite and hopes for a rate cut from the Federal Reserve in September. However, these rate cut hopes have been dampened by concerns over inflation.
Investor sentiment has been impacted by US Durable Goods Orders, which showed a positive recovery in April, and easing inflation expectations for the month of May. Furthermore, Fed officials have been pushing back on rate cut expectations, stating that more evidence is needed to support a rate cut. This cautious stance has led to uncertainty in the market, with commodity traders still reeling from the fallout of decreased rate cut hopes.
Looking ahead, Fedspeak and the Personal Consumption Expenditures (PCE) index remain in the spotlight as policymakers continue to shape market expectations. With US Crude Oil production still weighing on prices due to oversupply concerns, traders are hoping for increased demand to offset the surplus. Technical analysis shows that WTI is currently trading below the 200-hour Exponential Moving Average, but Friday’s rebound has brought it back into familiar technical congestion.
Despite holding onto gains from the beginning of the year, WTI is still down nearly -11% from its peak in 2024. The recent rebound has brought some relief to oil prices, but the ongoing oversupply issue continues to impact market sentiment. Traders will be closely watching developments in US Crude Oil production and demand to gauge the future direction of oil prices.
