WTI Steadies Above $68.50 Amid Surprise Crude Draw and Ceasefire Developments

West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $68.65 as of Wednesday. The price remains stable, supported by an unexpected draw in US crude inventories, which offsets the potential bearish impact of a ceasefire agreement between Israel and Hezbollah. Trading volumes are expected to remain light due to the Thanksgiving Day holiday in the US.

The US Energy Information Administration (EIA) reported a notable 1.844 million barrel drop in crude oil stockpiles for the week ending November 22, surpassing expectations of a 1.3 million barrel decline. This bullish signal contrasts with a rise in gasoline inventories, which climbed by 3.3 million barrels compared to the previous week’s 2.1 million barrel increase.

On the geopolitical front, Israel’s ceasefire deal with Hezbollah marks a significant easing of tensions in the Middle East. However, the durability of the truce remains uncertain. Dennis Kissler, Senior VP of Trading at BOK Financial, commented,

Economic Factors Weighing on Oil Prices

In the broader market, recent US economic data points to stalled progress on inflation, dampening expectations for significant Federal Reserve rate cuts in 2025. Markets currently price a 66.5% chance of a quarter-point rate cut in December, up from 55.7% before the release of the PCE data. However, the Fed is widely expected to maintain current rates at its January and March meetings.

The possibility of slower rate reductions could sustain high borrowing costs, potentially curbing economic activity and oil demand. This, coupled with easing geopolitical risks, could limit further upside for WTI.

While bearish pressures remain, the unexpected crude draw and continued focus on Middle East developments are likely to keep WTI prices supported in the near term.