WTI slides towards $79.00 ahead of Fed decision

WTI gained support at a $78.66 daily low and later rose above $79.00 although still suffering daily losses. The FOMC decision, which is anticipated to result in a 25 bps raise, will be the session’s high point.

EIA Crude Oil stockpiles decreased by 0.6M in the third week of July, which was less than anticipated. As markets wait for the Fed’s interest rate decision, WTI barrel prices are sluggish on Wednesday. A further factor that appears to be affecting oil prices is the Energy Information Administration’s (EIA) estimate that stocks decreased by less than anticipated in the week ending on July 21.

In contrast, the US dollar is weakening as measured by the DXY Index, and US Treasury rates are falling in advance of the Fed’s statement later in the US session. Markets are betting against a similar increase in September (20%) and November (45%), respectively, despite having already included in a 25 basis point (bps) hike.

Since there won’t be a revised macro forecast or dot plot, investors will need to base their expectations for the next meetings on the language regarding forward guidance. It’s important to note that higher rates have a tendency to slow down economic activity, thus wagers on the Federal Reserve’s next move could have an impact on the dynamics of the WTI price.