WTI HOLDS BELOW $78.00, US PCE DATA LOOMS

• WTI drops to $77.75 in Thursday’s early Asian session. 
• EIA crude oil inventory rose by 4.199 million barrels last week, weaker than expected. 
• OPEC is considering extending their voluntary oil output cuts into the second quarter

Western Texas Intermediate (WTI), the US crude oil benchmark, is trading around $77.75 on Thursday. WTI prices edge lower as the Federal Reserve (Fed) delayed the first rate cuts while rising US oil stocks added to the pressure.

The US crude oil stocks increased by 8.428 million barrels for the week ending February 23 from 7.168 million barrels built in the previous reading, according to the American Petroleum Institute (API). Additionally, the EIA Crude Oil stockpiles came in weaker-than-expected, rising by 4.199 million barrels last week from 3.514 million barrels prior.

The Organization of the Petroleum Exporting Countries (OPEC) and its allies agreed last November to slash 2.2 million barrels per day in the first quarter, led by Saudi Arabia. Furthermore, OPEC is considering extending their voluntary oil output cuts into the second quarter, which could potentially tighten the market.

Meanwhile, Fed officials have highlighted in recent weeks a delay in interest rate cuts, which might dampen economic growth and decrease oil demand. Philadelphia Fed President Patrick Harker advocated last week for a steady and slow rate cut to minimize risk and general uncertainty. 

Fed Governor Bowman said inflation will continue to drop with interest rates maintained at the current levels, but it is not yet time to start cutting rates, while Kansas City Fed President Schmid stated that with inflation running above target, labor markets tight, and demand showing considerable momentum, there is no need to preemptively adjust the stance of monetary policy.

Market participants will keep an eye on the US Core Personal Consumption Expenditures Index (Core PCE) on Thursday, which is expected to ease to 2.8% YoY for the month of January. These events could significantly impact the USD-denominated WTI price. Oil traders will take cues from the data and find trading opportunities around WTI prices.