• WTI has tested territory above $70.00 as hopes for a neutral Fed policy remain solid.
• The report from IEA shows that global oil demand will grow by 2.4 million bpd this year, to a record 102.3 million bpd.
• Oil inventory data by the US EIA for the week ending June 09 will be in focus.

West Texas Intermediate (WTI), futures on NYMEX, are testing territory above the round-level resistance of $70.00 in the London session. The oil price has been infused with fresh blood as investors are hoping for a skip in the policy-tightening spell by the Federal Reserve (Fed), which will be announced at 18.00 GMT.

The US Dollar Index (DXY) has shifted into a bearish trajectory and is consistently refreshing its day’s low. At the time of writing, the USD Index has printed an intraday low of 103.16. The downside bias for the USD India is turning bulky as a neutral policy stance by the Fed would dampen its wide policy divergence with other central banks.

While the oil price is enjoying neutral policy predictions as the decision will phase out some fears of a recession in the United States to some extent. US factory activity has contracted straight for seven months, which is sufficient to describe oil’s bleak demand. But a neutral policy stance by Fed chair Jerome Powell would infuse some confidence and optimism among producers and market participants.

Investors should note that hawkish guidance by the Fed cannot be ruled out as inflationary pressures are still far from the desired rate of 2%.

Later this week, the European Central Bank (ECB) will also announce its interest rate decision. ECB President Christine Lagarde is expected to raise interest rates further as the Eurozone economy is facing sheer pressure from high inflation. More interest rate hikes by the ECB would dampen market sentiment.

Meanwhile, minutes from the latest oil market report published by the International Economic Agency (IEA) state that “global oil demand will grow by 2.4 million bpd this year, to a record 102.3 million bpd.” Global oil demand will rise by 6% between 2022 and 2028 to 105.7 mln bpd.

Apart from the Fed policy, investors will also focus on the weekly oil inventories data to be reported by US Energy Information Administration (EIA) for the week ending June 09.