- WTI price is supported as lower inflation data has raised expectations of a Fed rate cut in September.
- The U.S. Consumer Price Index fell 0.1% month-on-month in June, marking its lowest level in more than three years.
- U.S. gasoline demand hit 9.4 million barrels per day, the highest level for the Independence Day holiday week since 2019.
West Texas Intermediate (WTI) oil price is trading around $81.80 per barrel during Asian hours on Friday. Crude oil prices have found support as lower-than-expected US Consumer Price Index (CPI) data for June has raised expectations of a possible Federal Reserve (Fed) rate cut in September. Lower borrowing costs support the US economy, the world’s largest oil consumer, which in turn boosts demand for crude oil.
The US Consumer Price Index (CPI) declined 0.1% month-on-month in June, marking its lowest level in more than three years. The core CPI, which excludes food and energy price volatility, rose 3.3% year-on-year in June, compared with May’s 3.4% increase and the same expectation. Meanwhile, the core CPI rose 0.1% month-on-month, versus the expected and prior increase of 0.2%.
Federal Reserve Bank of Chicago President Austan Goolsbee said on Thursday that the U.S. economy appears to be on track to achieve 2% inflation. This suggests that Goolsbee is gaining confidence that the time to cut interest rates may be drawing near. He also stated “My view is that this is the path to 2%,” according to Reuters.
According to government data cited by Reuters, U.S. gasoline demand hit 9.4 million barrels per day (bpd) in the week ending July 5, the highest level for the Independence Day holiday week since 2019. Jet fuel demand, on a four-week average, was the strongest since January 2020. This robust fuel demand has prompted U.S. refineries to ramp up activity and draw from crude oil stockpiles, thereby supporting prices.
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.
