- WTI prices are holding steady as demand concerns have offset the potential impact of Hurricane Francine on US oil production.
- Oil demand faces challenges due to the increasing adoption of electric vehicles in key markets such as China.
- EIA crude oil stocks rose by 0.833 million barrels last week, versus the expected increase of 0.9 million barrels.
West Texas Intermediate (WTI) crude oil prices are holding steady at around $66.80 per barrel during the Asian session on Thursday. Concerns over weakened demand have offset the impact of Hurricane Francine on oil output in the United States (US), the world’s largest crude producer.
In particular, oil demand in key markets such as China is under pressure, with the increasing adoption of electric vehicles reducing oil consumption.
Energy production in the U.S. Gulf of Mexico was partially disrupted on Wednesday, and several oil refineries in Louisiana scaled back operations ahead of Hurricane Francine’s arrival, according to official reports cited by Reuters.
U.S. oil inventories rose overall last week as crude imports rose and exports declined, the Energy Information Administration (EIA) said Wednesday. The report also showed gasoline demand fell to its lowest level since May, while distillate fuel demand also declined, along with a drop in refinery activity.
Despite a smaller-than-expected inventory build, crude oil prices remained low. EIA data showed crude oil stocks rose by 0.833 million barrels for the week ending Sept. 6, slightly below the expected increase of 0.9 million barrels.
Earlier this week, the Organization of the Petroleum Exporting Countries (OPEC) cut its global oil demand growth forecast for 2024, marking its second consecutive downward revision. OPEC also lowered its demand expectations for next year.
Oil traders are now looking ahead to the release of the International Energy Agency’s (IEA) monthly market report later this week, looking for signs of a weakening demand outlook, according to a note from ANZ Research on Thursday.
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.
