- Oil prices remain stable around $ 65 after a mass sale of $ 12 last week.
- It is widely expected that OPEC+ countries increase production for the fourth consecutive month in August.
- The decrease in tensions in the Middle East is exerting additional bearish pressure on crude oil prices.
WTI crude prices are recovering from a minimum of two weeks, but approximately $ 12 $ below the maximums of the previous Monday is maintained, since peace in the Middle East and the market expectations that the OPEC+ countries will agree on another supply increase this week are limiting the upward attempts.
The commercial action shows minor profits on Monday, although with restricted prices within the range of the previous days around $ 65.00, with the level of $ 66.00 limiting the bullies for now.
Greater supply and lower demand expectations are weighing on prices
Investors anticipate a very likely agreement to increase the supply by 411,000 barrels per day for the fourth consecutive time this year, which, in the context of a weak global economic landscape, will probably lead to an excess of supply.
In China, the NBS manufacturing PMI revealed that the manufacturing activity contracted for the third consecutive month in June, affected by weak demand and an uncertain commercial context. The US economy contracted in the first quarter of the year, and the Eurozone is fighting. These numbers point to a weak oil demand in the coming months.
In addition, the ongoing peace between Israel and Iran has relieved concerns about a possible interruption of the global supply if the conflict will overflow in a large -scale regional war. This is adding negative pressure on prices.
WTI FAQS oil
WTI oil is a type of crude oil that is sold in international markets. WTI are the acronym of West Texas Intermediate, one of the three main types that include the Brent and Dubai’s crude. The WTI is also known as “light” and “sweet” by its relatively low gravity and sulfur content, respectively. It is considered high quality oil that is easily refined. It is obtained in the United States and is distributed through the Cushing Center, considered “the crossing of the world.” It is a reference for the oil market and the price of WTI is frequently traded 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 the increase in demand and vice versa in the case of weak global growth. Political instability, wars and sanctions can alter the offer and have an impact on prices. OPEC decisions, 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, since oil is mainly traded in US dollars, so a weaker dollar can make oil more affordable and vice versa.
Weekly reports on oil inventories 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 show a decrease in inventories, it can indicate an increase in demand, which would raise the price of oil. An increase in inventories may reflect an increase in supply, which makes prices lower. The API report is published every Tuesday and that of the EIA the next day. Their results are usually similar, with a 1% difference between them 75% of the time. EIA data is considered more reliable, since it is a government agency.
The OPEC (Organization of Petroleum Exporting Countries) is a group of 13 nations oil producing that collectively decide the production quotas of member countries in biannual meetings. Their decisions usually influence WTI oil prices. When OPEC decides to reduce fees, it can restrict the supply and raise oil prices. When OPEC increases production, the opposite effect occurs. The OPEC+ is an expanded group that includes another ten non -members of the OPEC, among which Russia stands out.
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.
