WTI trades with modest gains above mid-$81,00s, bullish potential seems intact

• WTI regains some positive traction on Thursday and is supported by a combination of factors.
• The Fed’s projected three rate cuts in 2024 undermine the USD and benefit the black liquid.
• Worries about tightening global support prospects for a further near-term appreciating move.

West Texas Intermediate (WTI) US Crude Oil prices attract some dip-buying during the Asian session on Thursday and reverse a part of the previous day's losses. The commodity currently trades around the $81.70 region and remains well within the striking distance of over a four-month high touched earlier in the week.

The Federal Reserve (Fed) maintains its outlook for three interest rate cuts this year at the end of the March policy meeting on Wednesday. This is seen undermining the US Dollar (USD) and benefitting USD-denominated commodities, including Crude Oil prices. Moreover, Fed Chair Jerome Powell acknowledged strength in the US economy, which bodes well with a positive outlook for Oil demand and further lends support to the black liquid.

Adding to this, a larger-than-expected fall in the US crude inventories, along with potential supply shocks from geopolitical disruptions in Russia and the Middle East, suggests that the path of least resistance for Oil prices is to the upside. The official report published by the US Energy Information Administration (EIA) showed on Wednesday stockpiles declined unexpectedly by 2 million barrels to 445 million barrels during the week ended March 15.

Market participants now look to the release of the flash PMIs for cues about global economic health, which impacts fuel demand. This, along with the USD price dynamics, should produce short-term trading opportunities around Oil prices. The aforementioned fundamental backdrop, meanwhile, seems tilted firmly in favour of bullish traders, suggesting that any meaningful corrective decline could be seen as a buying opportunity and remain limited.