WTI extends recovery to $78.50 ahead of global inflation data, OPEC meet

• WTI jumps to $78.50 with a focus on global inflation data.
• The Fed is expected to announce rate cuts in the last quarter of this year.
• Investors will focus on the OPEC meeting to know about any change in the oil supply policy.

West Texas Intermediate (WTI), futures on NYMEX, rises further to $78.50 in Monday’s New York session. The Oil price rises even though investors expect that the Federal Reserve (Fed) will consider reducing interest rates from the current levels in the last quarter of this year.

Market speculation for Fed rate cuts has shifted to the last quarter from the September meeting as policymakers want the continuation of current policy framework for a longer period until they get evidence that inflation will sustainably return to the desired rate of 2%. Fed officials emphasize keeping the policy framework restrictive despite the slowdown in price pressures in April suggested by the Consumer Price Index (CPI) report of the same month.

Historically, easing Fed rate-cut prospects is an unfavorable situation for the Oil price as higher interest rates reduced flow of liquidity into the economy, which weakens the OIL demand outlook.

This week, investors will focus on the United States core Personal Consumption Expenditure price index (PCE) data for April and the Eurozone preliminary inflation data for May, which will influence speculation for rate cuts by the Fed and the European Central Bank (ECB), respectively, which will be published on Friday.

The ECB is expected to begin cutting key borrowing rates in June, while investors doubt whether policymakers will follow the dovish decision in the July meeting, too.

On the supply front, investors will focus on the OPEC meeting that is scheduled for June 2. Investors will focus on whether oil-rich nations will change the current output cut of 2.2 million barrels for data.