- The price of WTI rises as the OPEC+ group has delayed the planned production increase.
- OPEC+ has extended its production cut of 2.2 million barrels per day until the end of December 2024.
- Traders are watching the upcoming US presidential election and the Fed’s policy decision this week.
The price of West Texas Intermediate (WTI) oil appreciated more than 1% on Monday, trading around $70.20 per barrel during Asian hours. The recent rise in crude oil prices can be attributed to the delay in a planned production increase by the OPEC+ coalition, which includes the Organization of the Petroleum Exporting Countries and its allies such as Russia.
On Sunday, the OPEC+ alliance agreed to extend its 2.2 million barrels per day (bpd) production cut until the end of December 2024, citing weak demand and rising supply outside the group. In addition, member countries reaffirmed their commitment to “achieve full compliance” with production targets and offset any overproduction by September 2025.
Traders are closely watching the upcoming US presidential election on Tuesday as polls indicate a close race between Democratic candidate Kamala Harris and Republican nominee Donald Trump in seven key states, according to the latest New York poll. Times/Siena College cited by Reuters.
The poll shows Vice President Harris with slight leads in Nevada, North Carolina and Wisconsin, while former President Trump has a narrow lead in Arizona. The candidates are tied in Michigan, Georgia and Pennsylvania. Conducted from October 24 to November 2, the survey suggests that all matchups fall within a 3.5% margin of error.
In addition to the election, traders are also focused on the upcoming policy decision from the US Federal Reserve (Fed), with expectations of a modest 25 basis point rate cut this week. The CME’s FedWatch tool currently shows a 99.6% probability of a quarter-point rate cut by the Fed in November.
In China, the Standing Committee of the National People’s Congress meets from November 4 to 8, during which it is expected to approve additional stimulus measures aimed at boosting the slowing economy. Any additional measures taken could have a positive impact on oil prices, given that China is the world’s largest oil importer.
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.
