- WTI depreciates as Israel is willing to refrain from attacking Iranian oil facilities.
- Israeli Prime Minister Benjamin Netanyahu informed the US that Israel plans to attack Iranian military targets rather than nuclear or oil infrastructure.
- OPEC’s monthly market report revised down its global oil demand growth outlook for 2024 and 2025.
The price of West Texas Intermediate (WTI) oil continues its decline for the third consecutive session, trading around $71.10 per barrel during Asian hours on Tuesday. Crude oil prices are facing downward pressure following a media report suggesting Israel is set to refrain from attacking Iranian oil facilities, easing concerns about potential supply disruptions.
The Washington Post reported on Monday that Israeli Prime Minister Benjamin Netanyahu informed the United States (US) that Israel plans to focus on Iranian military targets rather than nuclear or oil infrastructure. Last week, oil prices had gained support as investors feared supply risks after Israel indicated plans to retaliate against a missile attack by Iran.
On Monday, crude oil prices fell almost 5% following the release of OPEC’s monthly market report, which revised down its global oil demand growth outlook for 2024 and 2025. OPEC also cut its forecast China’s crude oil demand growth for the third consecutive month in October, citing growing adoption of electric vehicles and slow economic growth as key factors.
The Organization of the Petroleum Exporting Countries’ (OPEC) Monthly Oil Market Report (MOMR) suggests that China’s crude oil demand will expand by 580,000 barrels per day (bpd) in 2024. This estimate is lower than the increase in 650,000 bpd forecast in September and is also 180,000 bpd below the 760,000 bpd increase that OPEC forecast in July for the world’s largest oil importer.
Oil market sentiment has turned bearish due to rising deflationary pressures in China, which have raised concerns about slowing economic growth. Despite recent stimulus plans, uncertainty around the size of the package has failed to ease fears of downside risks to China’s economic outlook, further weakening trader confidence.
Saudi Arabia could increase production amid declining cohesion among OPEC+ members. Despite voluntary production cuts, OPEC+ producers have been overproducing by up to 800,000 barrels per day. The Saudi oil minister warned that prices could fall to $50 a barrel if member countries do not comply with agreed cuts.
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.
