- The price of the WTI remains defensive about $ 65.70 in the first Asian session on Wednesday.
- Crude inventories in the United States increased by 19.1 million barrels last week, according to the API.
- China registered a better quarter growth than expected, which could help limit WTI losses.
The West Texas Intermediate (WTI), the referent of the US crude oil, is being negotiated around $ 65.70 during the first hours of Asian negotiation on Wednesday. The price of the WTI drops slightly in the middle of the decrease in concerns about the interruption of the supply after the US president, Donald Trump, established a period of 50 days for Russia to end the war in Ukraine.
Trump announced on Monday night new armaments for Ukraine and threatened sanctions to Russian exports buyers unless Russia accepts a peace agreement in 50 days. The WTI price loses land since the 50 -day period generates hope that sanctions can be avoided.
The US crude oil inventories increased unexpectedly last week, pointing out a weaker demand and weighing on the price of WTI. The weekly report of the American Petroleum Institute (API) showed that crude oil reserves in the US for the week that ended on July 11 increased by 19.1 million barrels, compared to a fall of 7.1 million barrels in the previous week. The market consensus estimated that reserves would decrease by 2 million barrels. It is the largest weekly increase reported by the API in at least a decade.
On the other hand, the Gross Domestic Product (GDP) report of China, better than expected, could provide some support to the WTI price, since China is the second largest oil consumer in the world. The Chinese economy grew by 5.2% year -on -year in the second quarter (Q2), compared to 5.4% in the first quarter (Q1), according to the National Statistics Office (NBS). That was higher than the 5.1%estimate. “The Chinese economic data were favorable during the night,” said Phil Flynn, senior analyst at Price Futures Group.
WTI oil – frequent questions
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.
