- WTI attracts some follow-through sellers and falls to a two-week low on Thursday.
- News that Saudi Arabia will increase production and concerns about demand are weighing on the commodity.
- The technical setup favors the bears and supports the prospects for a further bearish move.
US West Texas Intermediate (WTI) crude oil prices remain under strong selling pressure for the second consecutive day and retreat further from a multi-week high around the $72.20 region touched on Tuesday. The downward trajectory dragged the commodity to a two-week low around the $67.00/barrel level during the first half of the European session and is sponsored by fresh concerns over global supply glut.
The Financial Times reported that Saudi Arabia – the world’s largest crude exporter – is preparing to abandon its $100/barrel price target as it prepares to increase production. This comes on top of a possible return of Libyan supply and is proving to be a key factor putting downward pressure on crude oil prices. Indeed, Libya’s factions have taken an initial step towards resolving the dispute and signed an agreement on the process of appointing a central bank governor.
Additionally, a hurricane threatening the US Gulf Coast has changed course – moving away from oil and gas producing areas near Texas, Louisiana and Mississippi – and is expected to hit Florida as a “catastrophic” Category 4 storm. This further eases concerns about supply disruptions, overshadowing signs of rising fuel demand in the US – the world’s largest oil consumer – and further contributing to the decline amid lingering concerns about fuel demand from China.
From a technical perspective, crude oil prices showed some resistance below the 61.8% Fibonacci retracement level of the recent rally from the lowest level since May 2023 touched earlier this month and bounced back to the $68.00 level. That said, the lack of follow-through buying, coupled with the fact that oscillators on the daily chart remain in negative territory, suggests that the path of least resistance for the commodity is to the downside.
Bearish traders, however, need to wait for a sustained break below the $67.00 level before positioning for further losses. Crude oil prices could then weaken further below the $66.45 area, or the 61.8% Fibonacci level, towards the $66.00 level and the $65.75-$65.70 horizontal support. The downward trajectory could drag the commodity further towards the psychological $65.00 level en route to the yearly low, around the $64.75 region.
WTI 4-hour chart
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.
