- WTI could receive support as PBoC rate cuts could stimulate China’s economic activity, potentially increasing oil demand.
- US President Joe Biden declared that there is an opportunity to end the conflict between Israel and Iran for a time.
- Shell and the Maritime and Port Authority of Singapore have implemented clean-up measures in response to an onshore pipeline leak.
The price of West Texas Intermediate (WTI) oil rises after a drop of more than 7% recorded the previous week, trading around $68.90 per barrel during Asian hours on Monday. However, the downside could be limited as rate cuts in China, the largest oil importer, are expected to stimulate domestic economic activity, potentially increasing oil demand. The People’s Bank of China (PBoC) reduced the 1-year LPR to 3.10% from 3.35% and the 5-year LPR to 3.6% from 3.85%, aligning with expectations.
However, crude oil prices received downward pressure, partly due to slowing economic growth in China. On Friday, China’s Gross Domestic Product (GDP) grew at an annual rate of 4.6% in the third quarter of 2024, slightly below the 4.7% growth recorded in the second quarter, but exceeding expectations of the 4.5% market.
Additionally, easing geopolitical tensions in the Middle East have reduced concerns about supply disruptions from the region. US President Joe Biden declared on Friday that there is an opportunity to “deal with Israel and Iran in a way that ends the conflict for a time.” However, on Sunday, Israel announced that it was preparing to attack sites in Beirut linked to Hezbollah’s financial operations, according to Reuters.
In another development, Reuters reported that Shell and the Maritime and Port Authority of Singapore implemented clean-up measures following an onshore pipeline leak. The leak has reportedly been contained at the source, with no impact on boating safety. A Shell spokesperson confirmed the leak at the Shell Energy and Chemicals Park, saying emergency response specialists had been sent to manage the situation.
WTI Oil FAQs
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 benchmark for the oil market and the price of WTI is frequently quoted 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 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 price factor. 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.
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 decline 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 difference of 1% between them 75% of the time. EIA data is considered more reliable since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 13 oil-producing nations that collectively decide member countries’ production quotas 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.
