Ahead of FOMC decision, WTI climbs amid Chinese stimulus

The WTI climbed above $79.00. The American crude records a four-day winning streak on Tuesday, but the upside may be limited to technical indicators starting to flash overbought conditions.

Chinese economic stimulus supported Oil prices while focus in the markets shifts to Wednesday’s Fed decision. Earlier in the day, Chinese news agency Xinhua reported that the Politburo – the ruling Communist Party’s top decision-making body – announced they will take up economic policy adjustments to raise domestic demand and bolster confidence.

As China is the world’s biggest oil importer, a more robust local economy would boost energy prices, increasing the black gold price. On the other hand, all eyes are on Wednesday’s Fed decision. Markets expect Chair Powell to deliver a 25-basis point (bps) hike to 5.25% and a data-dependent message.

As the US economy is holding resilient and the labour market still shows tightness, the FOMC won’t be so comfortable taking off the table an additional hike past July. In that sense, messaging in the policy statement and Powell’s press conference will be crucial.