• On Friday, WTI prices are rising near $78.90.
• Softer inflation data in the US in April, expectations of Fed interest rate cuts and a decline in US oil stocks strengthen the black gold.
• The continuing geopolitical risk in the Middle East may limit the decline in WTI prices.

Western Texas Intermediate (WTI), the U.S. crude oil benchmark, is trading around $78.90 on Friday. Black gold is gaining in value due to the recent decline in US oil stocks and possible interest rate cuts by the Federal Reserve (Fed).

The latest US CPI inflation report this week showed that US inflation declined slightly in April, raising expectations of interest rate cuts by the US Fed in September. This in turn negatively affects the US dollar (USD) and benefits USD-denominated oil as lower interest rates aid stimulate the economy, which can enhance demand for crude oil.

On the data side, the decline in crude oil stocks has lifted black gold. According to the Energy Information Administration (EIA), U.S. crude oil inventories for the week ending May 3 fell by 2.5 million barrels to 457 million barrels, compared with 1.36 million barrels drawn in the previous week. The market consensus predicted a decline in inventories by 1.35 million barrels.

According to Reuters, on Thursday, Israeli tanks entered Jabalia in the northern Gaza Strip and struck Rafah in the south without advancing. Ceasefire negotiations brokered by Qatar and Egypt have reached an impasse, with Hamas demanding an end to attacks and Israel refusing until the group is annihilated. Oil traders will be closely monitoring developments around renewed geopolitical tensions in the Middle East. The growing geopolitical risk may raise concerns about disruptions in crude oil supplies, which will result in an enhance in WTI prices.