WTI trades sideways around $79.00 with eyes on PBoC policy decision
|- WTI trades inside Thursday’s trading range ahead of PBoC’s interest rate decision.
- The oil demand outlook has improved as US inflation softens as expected in April.
- Fed policymakers see a one-time decline in inflation as insufficient to roll back restrictive policy stance.
West Texas Intermediate (WTI), futures on NYMEX, are stuck in a tight range slightly below $79.00 in Friday’s New York session. The oil price struggles for a direction as investors shift focus to the People’s Bank of China’s (PBoC) monetary policy decision, which will be announced on Monday.
The PBoC is expected to maintain a dovish stance on interest rates as the Chinese economy is still recovering from low consumer price inflation due to weak consumer spending. Investors should note that China is the largest importer of Oil in the world and the maintenance of expansionary policy stance by the PBoC improves its near-term outlook.
Meanwhile, the decline in the United States inflation has also improved prospects of the oil demand. The expected fall in the US inflation as indicated by the Consumer Price Index (CPI) report for April has boosted expectations that the Federal Reserve (Fed) will start reducing interest rates from the September meeting.
However, Fed officials have not convinced that inflation is on track to return to the desired rate of 2%. On Thursday, New York Fed Bank President John Williams said the monetary policy is restrictive and is in a good place. He doesn’t see any economic indicator suggesting the need to change the stance of monetary policy now. When asked about the inflation outlook, Williams said, “In the very near term, I don't expect to get that greater confidence that we need to see on inflation progress towards a 2% goal," Reuters reported.
(This story was corrected on May 17 at 14:18 GMT to state that China is the largest importer of Oil in the world, not Canada.)
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.