• On Wednesday, WTI prices marginally decline to $79.90, down 0.20% for the day.
• The black gold is impacted by the Fed’s aggressive posture and the higher USD.
• It is largely expected that OPEC+ will continue to reduce output at this rate through the end of the year.

The benchmark for US crude oil, Western Texas Intermediate (WTI), is now trading at about $79.90 on Wednesday. The US Federal Reserve’s (Fed) hawkish comments and the resurgence of demand for US dollars (USD) caused the black gold to become red.

In the last several weeks, several Fed members made aggressive statements following data indicating that US inflation is higher than anticipated. Fed Minneapolis President Neel Kashkari stated on Tuesday that interest rate reductions should be postponed until there has been meaningful progress on inflation. The story of increasing US interest rates over extended periods is still hurting black gold because it makes borrowing more expensive, which can reduce demand for oil and economic activity.

On the other hand, a virtual meeting to review its production policy will be held on June 2 by the Organisation of the Petroleum Exporting Countries (OPEC) and its allies, which includes Russia (OPEC+). Analysts predict that OPEC+ would keep daily curbs on the supply of crude oil at 2.2 million barrels, which might prevent the decline in WTI prices. Given that Brent is currently trading closer to $80 per barrel than $90 per barrel, OPEC+ countries are unlikely to increase output, according to Michael Hsueh, an analyst at Deutsche Bank.

The International Monetary Fund (IMF) raised China’s forecast for economic growth in 2025 from 4.1% to 4.5% early on Wednesday. Since China is the world’s largest oil importer, accounting for 80% of non-OECD oil consumption, the good developments surrounding China’s economic outlook may contribute to an increase in WTI prices.