WTI Crude’s recovery from last week’s $56.60 lows stalled on Tuesday at $58.30 before slipping back to around $57.60 in early European trading on Wednesday. A firmer US Dollar and weaker-than-expected EIA inventory data have weighed on prices, offsetting support from geopolitical tensions in key regions.
Dollar strength and inventory data cap gains
The US Dollar found support following the release of the Federal Reserve’s latest monetary policy minutes. While the Fed cut interest rates by 25 basis points as expected, the high number of dissenting officials and ongoing inflation concerns cast uncertainty over the timing of the next rate reduction.
The US Energy Information Administration (EIA) reported a 400K-barrel rise in commercial crude inventories for the week ending December 26, reaching 424.8 million barrels, despite increased holiday demand. Coupled with a rise in active oil rigs, according to the Baker Hughes report, the data added downward pressure on prices.
Geopolitical risks provide partial support
Crude has retained much of its recent gains as fading hopes for a Russia-Ukraine peace deal and tensions between Israel and Iran underpin safe-haven buying.
OPEC+ delegates also confirmed plans to maintain current production levels over the coming months to support market stability amid oversupply concerns. However, the announcement had a limited positive impact on prices.
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