WTI stabilizes above $80 ahead of US inventory report, inflation data

• Oil prices are moving sideways ahead of US oil inventory data
• The US EIA is expected to show a reduction in oil inventories for the second consecutive week.
• Investors look to US core PCE inflation for further guidance on interest rates.

The futures of West Texas Intermediate (WTI) on NYMEX They are trading near an eight-week high, around $82.00 in the European session on Wednesday. The price of oil has remained bullish for nearly three weeks on hopes of strong demand due to severe heat waves in the northern hemisphere amid the summer holiday season. The summer season drives energy demand, which is favorable for the price of oil.

Apart from the improvement in demand, disruptions in oil supply due to tensions in the Middle East and the war between Russia and Ukraine have also kept the price of oil rising. Reuters reported, “The Houthis have so far sunk two vessels and captured another, and said on Tuesday they used a missile to hit a vessel in the Arabian Sea.”

In Wednesday’s session, investors will focus on crude oil inventory data from the United States (US) Energy Information Administration (EIA) for the week ending June 21. The report is expected to show a reduction in oil reserves by three million barrels.

For a broader outlook on demand, investors await US core personal consumption expenditure (PCE) price index data for May, due out on Friday. On an annual basis, core inflation data is estimated to have softened to 2.6% from the previous release of 2.8%, with monthly figures growing at a slower pace of 0.1% from 0.2% in April.

Soft inflation numbers would raise expectations of early rate cuts by the Federal Reserve (Fed). This would eventually improve the attractiveness of the oil price as lower interest rates boost liquidity in the economy.