WTI crude oil prices increased to $67.20 during the early Asian session, influenced by geopolitical tensions in the Middle East. The resumption of Israeli military operations in Gaza has contributed to rising crude prices.
Additionally, US crude oil inventories rose by 1.745 million barrels last week, reflecting a larger increase than the previous week’s 1.448 million barrels, exceeding market expectations of 1.17 million barrels.
Federal Reserve Decision And Its Impact
The US Federal Reserve held interest rates steady at 4.25%-4.50% during its recent meeting, with expectations of potential rate reductions later this year due to economic conditions, impacting energy demand forecasts.
With crude prices climbing above $67, we find ourselves looking at how the latest tensions in the Middle East are pushing energy costs higher. The Israeli military’s renewed operations in Gaza have played no small part in this, as uncertainty in key oil-producing regions often fuels price increases. Geopolitical risks tend to encourage traders to factor in potential supply disruptions, making crude more expensive in the short term.
There’s something else weighing on sentiment. US stockpiles have jumped again, coming in at 1.745 million barrels—higher than both the prior week’s 1.448 million and the expected 1.17 million. A build of this size usually suggests weaker demand or increased output, yet prices have moved higher regardless. That tells us geopolitical developments are overshadowing inventory concerns, at least for now.
Then there’s the Federal Reserve. Keeping rates unchanged at 4.25%-4.50% was widely expected, but attention has already shifted to what happens next. Speculation around potential rate cuts later this year has stirred discussions about economic growth and, by extension, energy consumption. Lower borrowing costs could support industrial activity, which would typically lead to stronger oil demand. But we’re not there yet—traders will be monitoring shifts in rate expectations closely.
Key Considerations For Market Participants
For those navigating derivatives markets, understanding how these pieces fit together is more important than ever. Supply-side risks, demand signals, and central bank policies are all shaping price action, and any shifts in these factors could introduce fresh volatility. At the moment, geopolitical concerns appear to be keeping prices underpinned, but inventory trends and monetary policy remain key drivers that shouldn’t be overlooked.
