- Oil (WTI) advances more than 1.5% awaiting weekly EIA data.
- The Dollar hits another 10-month high as investors take refuge in the Dollar.
- Overnight, API figures showed a small build-up in reserves.
The prices of Petroleum They are just inches away from reaching a new high by 2023, as investors prepare for the weekly report from the Energy Information Administration (EIA) and rumors that Aramco will sell its oil at high prices in Asia. Although the buildup or drawdown of crude oil reserves will be important, traders will look to the Cushing reserve, which is flirting with a decade low. Another large reduction in that reserve would mean a large increase in demand that would affect oil markets and, therefore, higher prices.
Meanwhile, the Dollar continues to record new 40-week highs, and this week the main factor has been the stalemate on Capitol Hill. Both the Senate and the House of Representatives are introducing bills, proposals that alone are not enough to avoid a shutdown before October 1. As the deadline approaches, a US government shutdown on Saturday becomes more likely and markets could be left in the dark about where the US stands in terms of macroeconomic conditions. A prolonged shutdown would mean that many agencies would stop publishing economic data.
Crude oil (WTI) is trading at $91.37 per barrel, and Brent is trading at $93.57 per barrel at the time of writing.
Oil news and market movements
- The Dollar reaches a new high since December 2022.
- The American Petroleum Institute (API) on Tuesday reported a withdrawal of 1.59 million barrels of oil from US commercial storage for the week of September 22.
- The API report also mentioned that gasoline inventories saw a reduction of 70,000 barrels for the week, distillate inventories a reduction of 1.7 million barrels, and reserves at the Cushing (Oklahoma) storage center a reduction of 828,000 barrels.
- The Energy Information Administration (EIA) will report on weekly US oil supply on Wednesday around 14:30 GMT. Analysts predict that the report will show a decrease of 600,000 barrels in domestic crude oil, 200,000 barrels in gasoline and 1 million barrels in distillate values.
- Saudi Arabia’s Aramco will increase its prices in Asian markets for November crude contracts.
Oil Technical Analysis: Oil on fire
Oil prices are rising as traders begin to double down on a possible drawdown of the Cushing storage hub to a decade low. With gas prices rising at the pump, the US government can only release more reserves to ensure that prices do not become an inflationary force. This means that the US will have to buy crude oil on the market to replenish itself and fill the gaps it is creating in recent weeks.
On the upside, last year’s October and November double top at $93.12 remains the level to beat. Even though it appears to be within reach, markets have already priced in a host of potential supply shortfalls and a bullish outlook. If $93.12 is exceeded, we will have to look for $97.11, the August 2022 maximum.
To the downside, a new bottom forms near $88, with the highs of September 5 and 11 underpinning the current price action. Proof of this is the fall of September 13 and 21, which was reversed before $88. If it breaks $88, the August 10 high has to be enough to catch the drop near $84.20.
-638314137703733892.png)
WTI Oil Daily Chart
WTI Oil FAQ
What is WTI oil?
WTI oil is a type of crude oil that is sold in international markets. WTI stands for West Texas Intermediate, one of the three main types that include Brent and Dubai crude. WTI is also known as “light” and “sweet” for its relatively low gravity and sulfur content, respectively. It is considered a high-quality oil that is easily refined. It is sourced in the United States and distributed through the Cushing facility, considered “the pipeline junction of the world.” It is a reference for the oil market and the price of WTI is frequently quoted in the media.
What factors determine the price of WTI oil?
Like all assets, supply and demand are the main factors that determine the price of WTI oil. As such, Global Growth can be a driver of increased demand and vice versa in the case of weak global growth. Political instability, wars and sanctions can alter supply and impact prices. The decisions of OPEC, a group of large oil-producing countries, is another key factor in prices. The value of the US Dollar influences the price of WTI crude oil, as oil is primarily traded in US dollars, so a weaker dollar can make oil more affordable and vice versa.
How do inventories influence the price of WTI oil?
Weekly oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) influence the price of WTI oil. Changes in inventories reflect the fluctuation of supply and demand. If the data shows a decrease in inventories, it may indicate an increase in demand, which would drive up the price of Oil. An increase in inventories can reflect an increase in supply, which drives down prices. The API report is published every Tuesday and the EIA report the next day. Their results are usually similar, with a 1% drop between them 75% of the time. EIA data is considered more reliable since it is a government agency.
How does OPEC influence the price of WTI Oil?
OPEC (Organization of the Petroleum Exporting Countries) is a group of 13 oil-producing nations that collectively decide the production quotas of member countries at biannual meetings. Their decisions often influence WTI oil prices. When OPEC decides to reduce quotas, it can restrict supply and drive up oil prices. When OPEC increases production, the opposite effect occurs. OPEC+ is an expanded group that includes ten other non-OPEC member countries, including Russia.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
