- The price of WTI loses ground due to an unexpected increase in US crude oil reserves, raising concerns about a possible decrease in demand.
- The change in US EIA crude oil reserves increased by 3.591 million barrels last week, against an expected drop of 3.0 billion barrels.
- US crude oil imports reached 3.1 million barrels per day in May, the highest level since July 2022.
The price of West Texas Intermediate (WTI) crude oil falls to near $80.30 during the Asian session on Thursday, retreating further from a two-month high of $81.65. Crude oil prices came under pressure after an unexpected rise in US crude stockpiles, raising concerns about weakening demand in the world’s biggest oil consumer.
On Wednesday, data from the US Energy Information Administration showed that the change in US crude oil stockpiles rose by 3.591 million barrels in the week ending June 21, defying expectations of the market of a drop of 3,000 million barrels.
Ongoing geopolitical tensions in the Middle East and Ukraine could continue to boost oil prices. Israeli Prime Minister Benjamin Netanyahu has declared that the most “intense” phase of the attack on Hamas in Gaza is coming to an end, according to CNN. Meanwhile, Russia has condemned the US for a “barbaric” attack in Crimea, which used US-provided missiles, resulting in the deaths of at least four people, including children, and wounding 151 others, according to NBC News.
Last month, however, U.S. crude oil imports rose to their highest level in nearly two years, boosted by refiners buying heavy crudes from Canada and Latin America to produce fuels for the summer driving season. In May, U.S. crude oil imports reached 3.1 million barrels per day (bpd), the highest level since July 2022, according to ship-tracking service Kpler. So far this month, imports have remained robust, averaging about 2.9 million bpd, Reuters reported.
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.
