- WTI price weakens as IEA expects global oil demand growth to slow in 2024 and 2025.
- The IEA said China’s share of global demand will decline to around 40% from 70% last year.
- U.S. crude oil inventories decreased by 3.443 million barrels, versus the expected decrease of 3.0 million barrels.
West Texas Intermediate (WTI) crude oil prices are retracing gains from the previous session, trading around $81.40 per barrel during European hours on Thursday. Crude oil prices are under pressure as the International Energy Agency (IEA) reported that global oil demand growth is expected to slow to just under one million barrels per day (bpd) in 2024 and 2025, according to Reuters.
In its monthly oil report, the IEA noted that global demand in the second quarter rose by 710,000 bpd year-on-year, marking the smallest quarterly increase in more than a year. This slowdown is attributed to reduced Chinese consumption amid economic challenges. The IEA stated, “China’s pre-eminence is waning. Last year, the country accounted for 70% of global demand gains; this will slow to around 40% in 2024 and 2025.”
Traders are looking ahead to the upcoming US Consumer Price Index (CPI) data for June, due on Thursday, for more insight into the direction of the Federal Reserve’s (Fed) monetary policy. Higher interest rates weigh on the US economy, the world’s largest oil consumer, which in turn impacts demand for crude oil.
Oil prices found some support from a larger-than-expected draw in U.S. crude oil inventories. The Energy Information Administration (EIA) reported a draw of 3.443 million barrels in U.S. crude oil inventories for the week ending July 5, exceeding the expected draw of 3.0 million barrels.
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.
