WTI hovers around $78.00 amid geopolitical risks, EIA Oil inventories buildup

• WTI hovers around $78.00 in Friday’s early Asian session. 
• Crude oil inventory increased by 3.514 million barrels last week, below forecasts. 
• The ‘higher for longer’ interest rate narrative from major central banks might cap the upside of WTI. 

Western Texas Intermediate (WTI), the US crude oil benchmark, is trading around $78.00 on Friday. WTI prices edge higher as the EIA Crude Oil stockpiles report came in just below forecasts and the geopolitical tensions in the Middle East remain uncertain. 

Crude oil inventory increased by 3.514 million barrels for the week ending February 16 from the previous week's 12 million barrel gains, the Energy Information Administration reported on Thursday. 

Israel has carried out several attacks against Hezbollah targets in Lebanon in recent days, while Houthi militants in Yemen continue to attack ships in the Red Sea. The ongoing geopolitical tensions in the Middle East raise concern about the disruption in crude supplies, which supports WTI prices for the time being.

On the other hand, the possibility that the US Federal Reserve (Fed) and major central banks will maintain the ‘higher for longer’ interest rate narrative might cap the upside of WTI prices. The FOMC Minutes at its January meeting showed that the Fed officials wanted to see more evidence before beginning to cut rates while warning about the “risks of moving too quickly” on cuts. It’s worth noting that higher interest rates might drag WTI prices lower, as it translates to less demand for oil with higher costs and slowing the economy. 

Oil traders will keep an eye on the German Gross Domestic Product for the fourth quarter (Q4) and Fed Christopher J. Waller's speech on Friday. The US Gross Domestic Product Annualized (GDP) for Q4 will be released next week. These events could significantly impact the USD-denominated WTI price. Oil traders will take cues from the data and find trading opportunities around WTI prices.