WTI gains on sharp inventory decline, looming Fed rate decision

• WTI rises to $60.40 after a larger decline in US Crude Oil inventories.
• EIA data show US stockpiles down by nearly 6.9 million barrels, reinforcing optimism over demand.
• Markets expect the Federal Reserve to cut rates by 25 basis points later today.

West Texas Intermediate (WTI) US Oil climbs to $60.40 on Wednesday at the time of writing, advancing 0.55% for the day after three consecutive days of decline. The recovery comes as traders react to a sharper draw in US Crude Oil inventories and await the Federal Reserve (Fed) monetary policy decision later in the day.

The latest report from the US Energy Information Administration (EIA) shows that commercial Crude Oil inventories fell by nearly 6.9 million barrels for the week ending October 24, compared to a 4-million-barrel draw reported by the American Petroleum Institute (API) on Tuesday. At 416 million barrels, stockpiles now stand around 6% below the five-year seasonal average. Gasoline and distillate inventories also contracted significantly, by 5.9 million and 3.4 million barrels, respectively, suggesting stronger refining activity and healthy fuel demand.

Expectations of a rate cut by the Fed are adding further support to WTI Oil prices. Markets are pricing in a near-certainty of a 25-basis-point reduction later in the day, with another cut expected in December. Lower interest rates tend to weaken the US Dollar (USD), making Oil cheaper for foreign buyers and improving global demand prospects.

However, the upside for WTI could be limited by supply-side developments. According to Reuters, the Organization of the Petroleum Exporting Countries and its allies (OPEC+) are preparing to modestly increase output in December by around 137,000 barrels per day. While the planned rise remains moderate, it could temper price gains if global demand momentum slows in the coming months.

At current levels, WTI continues to consolidate above the key $60.00 mark, supported by robust US inventory data and expectations of a dovish Fed stance at 18:00 GMT.

WTI Technical Analysis: Rebounds from 100-period SMA support, eyes bullish breakout

WTI US Oil 4-hour chart. Source: FXStreet

WTI Crude Oil finds strong support around the 100-period Simple Moving Average (SMA) on the 4-hour chart, currently located near $59.49, after retreating from the $62.00 area earlier this week. The rebound from this key technical level suggests that buyers are attempting to regain control following several days of weakness.

A break above the intraday high and the descending trendline resistance, both converging around $60.84, would likely reinforce bullish momentum and open the door for a test of the psychological $61.00 handle. A sustained move above that level could extend the recovery toward $62.00 and the October 24 peak at $62.38.

On the downside, a clear drop below the 100-period SMA at $59.49 would undermine the current rebound and expose WTI to renewed selling pressure. In that scenario, the next support comes at the October 20 low near $55.97.