WTI rebounds above $74.00, focus on Red Sea developments
- WTI prices gain ground near $74.30, adding 0.52% on the day.
- The weaker USD due to a raised bet on rate cuts from the Fed, lifts the black gold.
- The escalating tension in the Red Sea prompted fears of shipping disruption.
Western Texas Intermediate (WTI), the US crude oil benchmark, is trading around $74.30 on Thursday. The recovery of WTI prices is bolstered by the softer US Dollar (USD), which lends some support to USD-denominated commodities.
That being said, the decline of the USD to a five-month low due to raising bets on interest rate cuts from the US Federal Reserve (Fed) has boosted the black gold. Investors have priced in over 88% of a rate cut starting in March 2024 and expect more than 150 basis points (bps) of rate cuts next year.
Market players will closely monitor the developments in the Red Sea as a drone attack on an oil tanker prompted fears of shipping disruption. Furthermore, the ongoing Israeli military attack in Gaza remained a major driver of market sentiment. Central Gaza was pummelling by land, sea, and air by Israeli forces on Wednesday, one day after Israel's Chief of Staff Herzi Halevi, stated that the conflict would last for many months.
According to the American Petroleum Institute weekly report on Wednesday, US crude oil inventories increased by 1.837M barrels for the week ending December 23 from the previous reading of 0.939M barrels gain.
Oil traders will keep an eye on the EIA Crude Oil Stocks Change report, due on Thursday. Also, the US Initial weekly Jobless Claims, Trade Balance for November, and Pending Home Sales will be released. Traders will take cues from the data and find trading opportunities around WTI prices.