West Texas Intermediate (WTI) futures on NYMEX rose by 0.25% to nearly $59.00 during Thursday’s Asian trading session. Ukraine’s strike on Russia’s Druzhba oil pipeline, which delivers energy to Hungary and Slovakia, has raised concerns about supply amidst ongoing sanctions on major Russian oil companies like Rosneft and Lukoil. Oil prices surged on Wednesday due to stalled peace talks between the US and Russia. Next week, the Federal Reserve is expected to announce a 25 basis point interest rate cut to a range of 3.50%-3.75%, which could increase oil demand.

The Probability of Interest Rate Cuts

The CME FedWatch tool indicates an 89% chance of the Fed cutting rates in December, marking the third consecutive reduction. WTI, a crude oil known for its low gravity and sulfur content, is traded globally, sourced from the US, and is easy to refine. Factors such as supply and demand, global growth, political instability, sanctions, and the US Dollar’s value all influence WTI prices. Weekly inventory reports from the American Petroleum Institute and Energy Information Agency, along with OPEC’s production decisions, also play a significant role in WTI price movements. With the situation in Ukraine escalating and the attack on the Druzhba pipeline, there is a clear indication of renewed supply-side risks in the market. This isn’t just background noise; recall that crude prices soared past $120 a barrel in 2022 due to similar supply worries. Traders should see the move toward $59 not as a high point, but as a possible foundation for further increases in the coming weeks.

Geopolitical Risks and Market Dynamics

The failure of US-Russia peace talks reinforces the notion that geopolitical risk will remain a concern. This ongoing uncertainty coincides with solid data showing a tighter market. The latest Energy Information Administration (EIA) report revealed a surprising inventory drop of 4.2 million barrels, contrary to expectations of a small increase, indicating that demand is outpacing supply. Looking ahead, the anticipated interest rate cut from the Federal Reserve next week is a key factor affecting demand. With an 89% likelihood of this cut, the US dollar is expected to weaken, making oil less expensive for foreign buyers and boosting consumption. This would mark the third consecutive rate cut, a strategy aimed at reviving an economy that has struggled throughout much of 2025. This monetary stimulus comes at a time when global demand forecasts are being revised upward, with projections for global consumption in 2026 now exceeding 104.5 million barrels per day. As a result, traders should consider bullish strategies like buying call options to take advantage of potential price increases from both supply disruptions and rising demand. Any price dips before the Fed meeting could be excellent entry points for long positions. Create your live VT Markets account and start trading now.

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