- WTI price gains ground due to speculation of a Fed rate cut in September.
- Crude Oil prices may struggle as a strong US jobs report would bolster a hawkish stance from the Fed.
- Concerns about a supply surplus have grown as OPEC+ decided to reverse voluntary cuts gradually.
West Texas Intermediate (WTI) Oil price recovers the previous session's losses, trading around $75.30 per barrel during Monday's Asian hours. This increase in crude Oil prices is largely due to speculation that the US Federal Reserve (Fed) may cut interest rates in September.
However, better-than-expected US employment data released on Friday has caused traders to delay their expectations of a Fed rate cut. According to the US Bureau of Labor Statistics (BLS), May's US Nonfarm Payrolls (NFP) increased by 272,000, up from 165,000 in April. The stronger employment data has attracted buyers to the US Dollar (USD), which has put downward pressure on Oil prices by making the commodity more expensive for buyer countries using other currencies.
Crude Oil prices may face pressure if borrowing costs remain high for an extended period, which would negatively impact Oil demand. A strong US jobs report would bolster a hawkish stance from the Federal Reserve. The CME FedWatch Tool indicates that the likelihood of a Fed rate cut in September by at least 25 basis points has decreased to nearly 48.0%, down from 54.8% a week earlier.
Additionally, concerns over a potential supply surplus of Oil have increased as the Organization of the Petroleum Exporting Countries and its allies (OPEC+) decided to gradually unwind voluntary cuts from eight member countries starting in October. By December, more than 500,000 barrels per day (bpd) are expected to re-enter the market, with a total of 1.8 million bpd returning by June 2025.
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