WTI holds above $70.00 amid Fed rate cut optimism and supply disruptions

• WTI extends the rally to nearly $70.85 in Wednesday's early Asian session. 
• Rising Fed rate cut bets and oil supply disruptions underpin the WTI price. 
• China's demand worries might limit the black gold's upside. 

West Texas Intermediate (WTI), the US crude Oil benchmark, is trading around $70.85 on Wednesday. WTI price edges higher amid supply disruptions in the Gulf of Mexico and the hope that the Federal Reserve (Fed) will cut interest rates on Wednesday.

The Bureau of Safety and Environmental Enforcement reported that US crude oil around 100,000 barrels per day, remained offline in the Gulf as of Tuesday due to Hurricane Francine. Additionally, the supply disruption in Libya amid a rift between rival factions over control of the central bank has led to lower oil output and lifted the WTI price. 

"Supply disruptions are making their mark, including Hurricane Francine's impact on US Gulf of Mexico infrastructure," said Svetlana Tretyakova, senior analyst at Rystad Energy.

Expectations of a Fed rate cut could revitalize demand in the top oil-consuming nation. The market ramps up expectations for a jumbo 50 basis points (bps) cut at the September Fed meeting on Wednesday, with nearly 67% odds pricing in, up from 30% a week ago. 

The US crude inventories climbed last week. According to the American Petroleum Institute (API), crude oil stockpiles in the United States for the week ending September 13 increased by 1.96 million barrels, compared to a decrease of 2.79 million barrels in the previous week. The market consensus estimated that stocks would decline by just 0.1 million barrels.

On the other hand, IG market strategist Yeap Jun Rong noted that the recent weaker-than-expected Chinese economic data dampened market sentiment, with the low-for-longer growth outlook in the world's second-largest economy reinforcing doubts over oil demand. The concerns about oil demand in China are likely to limit the WTI's upside for the time being.