WTI extends its upside above the $76.20 mark

• WTI crude oil extends its upside above the $76.20 mark heading into the European session.
• Market participants are repricing another Fed rate increase after the July meeting.
• Output cuts, the hope for China’s stimulus plan boosts the WTI price. 

Western Texas Intermediate (WTI), the US crude oil benchmark, is trading around the $76.20 mark so far this Friday. Earlier this week, the Energy Information Administration (EIA) reported that the EIA Crude Oil Stocks Change in the week ending July 14 fell by 708,000 barrels, compared to expectations of a drop of 2.44 million barrels and a gain of 5.946 million barrels the previous week.

That said, the upside for WTI seems limited as market participants are repricing another Fed rate increase after the July meeting, causing the Greenback to rebound. According to the CME FedWatch Tool, the odds for the November meeting climbed from 19.8% a week ago to 32.2%, showing traders are changing their views on Fed monetary policy. It’s worth noting that higher interest rates raise borrowing costs, which can slow the economy and diminish oil demand.

However, The Organisation of Petroleum Exporting Countries (OPEC) expects China's demand to grow in the second half of this year and boost global growth as China is the world's largest oil consumer.

Meanwhile, Russia plans to reduce its oil exports by 2.1 million metric tonnes in the third quarter, keeping with voluntary export restrictions of 500,000 barrels per day scheduled for August. On Tuesday, China’s Commerce Ministry stated that a series of measures will help boost the consumption of household consumer goods and services consumption. This, in turn, supports further upside in the WTI price. 

Next week, the Federal Open Market Committee (FOMC) meeting will be the key focus. Oil traders will closely watch this event and find opportunities around the USD-denominated WTI price.