- WTI price fell to fresh yearly lows of $68.85 in early Asian trading on Thursday.
- OPEC+ could delay planned increase in oil production.
- Concerns over weak Chinese demand weigh on WTI prices.
West Texas Intermediate (WTI), the benchmark for US crude oil, is trading around $68.85 on Thursday. The price of WTI remains under selling pressure and hits the lowest level since December 13, 2023, due to a negative outlook on oil demand in the coming months.
The Organization of the Petroleum Exporting Countries and its allies, or OPEC+, was discussing delaying an oil production increase scheduled to begin in October as Libyan output is expected to rise. “With demand growth uncertain and significant supply disruptions looking unlikely, all eyes are back on OPEC+,” said Svetlana Tretyakova, senior analyst at Rystad Energy.
Weaker economic data from China has raised concerns about the economic outlook for the world’s largest crude importer. Chinese NBS manufacturing activity fell to a six-month low in August, while the Caixin manufacturing PMI released on Wednesday was worse than expected.
U.S. crude oil inventories fell significantly last week. According to the American Petroleum Institute (API), U.S. crude oil inventories for the week ending August 30 fell by 7.8 million barrels, compared with a decline of 3.4 million barrels in the previous week. The market consensus was for inventories to decline by just 0.9 million barrels.
Looking ahead, traders will be keeping an eye on the US ISM Services PMI and the EIA weekly crude oil stocks report, due later on Thursday. On Friday, US Non-Farm Payrolls (NFP) for August will be in focus.
WTI Oil FAQs
WTI crude oil is a type of crude oil sold on international markets. WTI stands for West Texas Intermediate, one of 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 hub, considered “the pipeline crossroads 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 determining the price of WTI crude 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 disrupt supply and impact prices. Decisions by OPEC, a group of large oil producing countries, are another key driver of price. 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.
The 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 fluctuations in supply and demand. If the data show a decrease in inventories, it may indicate an increase in demand, which would push up the price of oil. An increase in inventories may reflect an increase in supply, which pushes down prices. The API report is published every Tuesday, and the EIA report the following day. Their results are usually similar, with a difference of 1% between them 75% of the time. The EIA data is considered more reliable because it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 13 oil-producing nations that collectively decide on member countries’ production quotas at biennial 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 countries, most notably 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.
