- The price of WTI falls to around $ 62.00 in the early Asian session on Thursday.
- The fears of an excess of oil supply at the global level undermine the price of WTI.
- Petroleum inventories fell to 4,304 million barrels in the week that ended on May 30, according to EIA.
- The increased geopolitical risks and the expectations that Iran will reject a nuclear agreement with the US could limit the fall of the WTI.
The West Texas Intermediate (WTI), the referent of American crude oil, quotes around $ 62.00 during Thursday’s Asian negotiation hours. The WTI price slides down while Saudi Arabia points out that it could press for a great increase in production, which generates fears of an excess of oil supply globally.
On Saturday, the organization of oil exporting countries and its allies (OPEP+) decided to increase their production on Saturday. OPEC+ planned to increase production at a constant pace of 411,000 barrels per day (BPD) in July, after an increase in May and June.
Bloomberg reported that Saudi Arabia is open to additional increases in crude oil production in an attempt to increase its market share, which is considered a strategy to reduce oil prices and punish OPEC+ members who are overcoming, such as Kazakhstan and Iraq. Concern for the world oil offer weighs on the price of WTI.
Gasoline stocks in the US increased by 5.2 million barrels, the Energy Information Administration (EIA) reported. The analysts surveyed expected an increase of 600,000 barrels. Meanwhile, crude oil inventories in the US fell more than expected last week. The EIA weekly report showed that crude oil reserves in the US for the week that ended on May 30 fell to 4,304 million barrels, compared to a decrease of 2,795 million barrels in the previous week. The market consensus estimated that stocks would fall into 900,000 barrels.
On the other hand, doubts about a nuclear agreement between the United States and Iran could help limit WTI losses. Iranian supreme leader Ali Khamenei said he does not believe that conversations with the US are successful, while US President Donald Trump declared that Tehán will face “something bad” if he does not quickly accept a US proposal on his nuclear program.
WTI FAQS oil
WTI oil is a type of crude oil that is sold in international markets. WTI are the acronym of West Texas Intermediate, one of the three main types that include the Brent and Dubai’s crude. The WTI is also known as “light” and “sweet” by its relatively low gravity and sulfur content, respectively. It is considered high quality oil that is easily refined. It is obtained in the United States and is distributed through the Cushing Center, considered “the crossing of the world.” It is a reference for the oil market and the price of WTI is frequently traded in the media.
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 the increase in demand and vice versa in the case of weak global growth. Political instability, wars and sanctions can alter the offer and have an impact on prices. OPEC decisions, a group of large oil -producing countries, is another key price factor. The value of the US dollar influences the price of WTI crude oil, since oil is mainly traded in US dollars, so a weaker dollar can make oil more affordable and vice versa.
Weekly reports on oil inventories 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 show a decrease in inventories, it can indicate an increase in demand, which would raise the price of oil. An increase in inventories may reflect an increase in supply, which makes prices lower. The API report is published every Tuesday and that of the EIA the next day. Their results are usually similar, with a 1% difference between them 75% of the time. EIA data is considered more reliable, since it is a government agency.
The OPEC (Organization of Petroleum Exporting Countries) is a group of 13 nations oil producing that collectively decide the production quotas of member countries in biannual meetings. Their decisions usually influence WTI oil prices. When OPEC decides to reduce fees, it can restrict the supply and raise oil prices. When OPEC increases production, the opposite effect occurs. The OPEC+ is an expanded group that includes another ten non -members of the OPEC, among which Russia stands out.
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.
