- WTI prices could advance further due to growing supply concerns amid tensions in the Middle East.
- The IDF intercepted around 30 “projectiles” that crossed from Lebanon into northern Israel on Monday morning.
- Oil prices gained ground due to positive economic data from China and the United States.
West Texas Intermediate (WTI) crude oil is trading around $76.00 per barrel during the Asian session on Monday. Crude oil prices could extend their winning streak to a fourth consecutive day, boosted by rising supply concerns amid geopolitical tensions in the Middle East.
ABC News reported that the Israel Defense Forces (IDF) intercepted around 30 “projectiles” that crossed from Lebanon into northern Israel on Monday morning. The IDF said some projectiles landed in open areas and no injuries were reported.
On Saturday, Israel’s incursion into Gaza intensified with an airstrike targeting a school compound, killing at least 90 people, according to Gaza’s Civil Emergency Service. Israel has disputed this casualty figure, calling it exaggerated. Meanwhile, Hamas has expressed uncertainty about the possibility of holding new ceasefire talks on Sunday, Reuters reported.
Oil prices were also boosted by positive economic data from China and the United States (US). Consumer prices in China rose faster than expected in July. China’s Consumer Price Index (CPI) rose 0.5% year-on-year in July, beating the 0.3% expected and the previous readings of 0.2%. Meanwhile, the monthly index also rose 0.5%, reversing the previous decline of 0.2%.
Additionally, U.S. Initial Claims for Jobless Benefits fell to 233,000 for the week ending August 2, below the market expectation of 240,000. This decline follows an upwardly revised figure of 250,000 for the previous week, which was the highest in a year.
Expectations of a possible interest rate cut by the Federal Reserve (Fed) in September could provide support to oil demand as lower borrowing costs will support economic activities in the US. The CME FedWatch tool indicates a 51.5% probability of a 25 basis point rate cut at the September meeting, a significant increase from the 26.0% probability reported a week ago.
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.
