Natural Gas, WTI Oil, Brent Oil Forecasts – Crude Rises on Fed Chair’s Rate Cut Hints

WTI Crude oil futures experienced an uptick on Wednesday, influenced by Federal Reserve Chair Jerome Powell’s remarks indicating potential interest rate reductions later this year, albeit with a cautious approach. Speaking to the House Financial Services Committee, Powell emphasized the need for more data before adjusting rates, though he is optimistic about policy loosening in 2023 as inflation control becomes more assured.

Powell suggested in his prepared statement that the Fed believes interest rates have reached their peak. Lower rates typically boost economic activity, subsequently increasing crude oil demand. However, the uncertainty regarding the timing of these rate cuts remains a significant barrier to a sustained oil rally.

Upcoming financial events, including Powell’s testimony and the European Central Bank’s interest rate decision, might fuel expectations for a rate cut as early as June. On the supply side, U.S. commercial crude inventories rose by 1.4 million barrels last week, reports the Energy Information Administration. This build is notably lower than previous weeks, as refineries ramp up processing of crude into finished products.

Concurrently, U.S. gasoline reserves saw a substantial decrease, indicating a rise in demand. Oil prices have been on a gradual incline this year, registering gains for two straight months. This trend is supported by OPEC+’s production cuts and ongoing geopolitical tensions in the Middle East.

Technically, the rally is likely to remain intact as long as prices hold above the 200-day moving average at $76.75. The current consolidation suggests traders are waiting for more bullish news before launching a rally into resistance at $82.68.