WTI recovers above $60.00 as Fed rate decision looms

• WTI price rebounds to near $60.05 in Wednesday's early European session.
• The API showed a larger draw than expected in US weekly crude supplies.
• OPEC+ is planning to increase modest output again in December, per Reuters. 

West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $60.05 during the early European trading hours on Wednesday. The WTI recovers some lost ground amid a larger-than-expected crude oil draw and expectation of a US rate cut. The Energy Information Administration (EIA) crude oil stocks change report will be published later on Wednesday. 

Data released by the American Petroleum Institute (API) on Tuesday showed that crude oil stockpiles in the US for the week ending October 24 fell by 4 million barrels compared to a decline of 2.98 million barrels in the previous week. The draw was larger than expected for a decline of about 2.9 barrels. Crude oil inventories in the US are so far showing a net loss of 6.4 million barrels for the year, according to Oilprice calculations of API data.

Oil traders will keep an eye on the US Federal Reserve (Fed)'s interest rate decision later on Wednesday. Markets are pricing nearly a 98.3% probability of a 25 basis points (bps) rate cut at its October meeting, with another reduction expected in December. 

A quarter-point cut would bring down the benchmark rate to a range of between 3.75% to 4.0%, and mark the Fed's second rate reduction this year. Lower interest rates generally weaken the US Dollar (USD) as it makes oil cheaper for foreign buyers, boosting global demand and lifting WTI prices.

On the other hand, a potential plan by the Petroleum Exporting Countries and its allies (OPEC+) to raise output might cap the upside for the WTI. OPEC+ is reportedly considering a modest production increase in December, four sources familiar with the talks told Reuters. The group is likely to agree on Sunday to increase December output targets by another 137,000 barrels per day (bpd).