WTI drops to near $77.50 as US PCE, OPEC+ meeting loom
- WTI price lost ground ahead of the US PCE on Friday.
- OPEC+ is expected to maintain supply cuts of 2.2 million barrels per day on June 2.
- EIA Crude Oil Stocks Change declined by 4.156 million barrels in the previous week, against the expected 1.900 million-barrel draw.
West Texas Intermediate (WTI) crude Oil continues its losing streak for the third consecutive day, trading around $77.50 per barrel during the Asian session on Friday. Traders are likely awaiting the upcoming meeting of the Organization of the Petroleum Exporting Countries and its allies, including Russia (OPEC+), scheduled for June 2. OPEC+ will begin a series of online meetings at 1100 GMT on Sunday.
According to Reuters, three sources familiar with OPEC+ discussions indicated on Thursday that the group is working on a complex deal to be agreed upon at its meeting on Sunday. This deal will potentially allow OPEC+ to extend some of its deep Oil production cuts into 2025.
The hawkish remarks from Federal Reserve (Fed) officials have raised concerns about potential rate hikes. Higher interest rates are negatively impacting the US economic outlook, which dampens the demand of the crude Oil.
The US Energy Information Administration (EIA) released its Oil stockpiles report, indicating that US crude inventories declined by 4.156 million barrels in the week ending on May 24. This figure exceeded expectations for a draw of 1.900 million barrels.
On Thursday, Dallas Fed President Lorie Logan expressed continued concerns about upside risks to inflation despite recent easing. Logan warned that the Federal Reserve needs to remain flexible and keep "all options on the table" as it monitors data and determines how to respond, according to Reuters. Additionally, Bloomberg reported on Wednesday that Atlanta Fed President Raphael Bostic stated the path to 2% inflation is not guaranteed and highlighted the significant breadth of price gains.
The US Dollar (USD) bounces back as investors brace for the release of the Federal Reserve's preferred inflation measure, the Core Personal Consumption Expenditures (PCE) Price Index, scheduled for Friday. However, the decrease in US Treasury yields might restrain the USD's gains. This could, in turn, bolster Oil demand as it becomes more affordable for purchasing countries with alternative currencies.