- WTI falls near $68.25 on stronger USD in the European session on Monday.
- Improved economic data from China and geopolitical risks could limit WTI’s decline.
- Oil traders prepare for the OPEC+ meeting on Thursday looking for fresh momentum.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $68.25 on Monday. The price of WTI falls as the strength of the US Dollar (USD) generally drags the price of the USD-denominated commodity downward.
US President-elect Donald Trump’s declaration that he will impose tariffs has raised fears that he could slow the pace of the Federal Reserve’s (Fed) easing cycle, boosting the USD. The rise of the USD against other currencies generally reduces demand for oil by making oil more expensive for those who use foreign currencies. According to the CME FedWatch tool, money markets have priced in at almost 67.1% the possibility that the Fed will cut rates by a quarter point in December, while there is a 32.9% probability that the rate monetary policy remains unchanged.
Encouraging economic data from China released on Monday could provide some support to the black gold as China is a large consumer of crude oil in the global market. China’s Caixin Manufacturing PMI jumped to 51.5 in November from 50.3 in October, beating the estimate of 50.5. This growth was driven by the increase in foreign orders since February 2023 and exports.
Additionally, rising geopolitical tensions in West Asia are raising concerns about supply disruptions from the region, which could drive up the price of WTI. Iran extended its support to the Syrian government after insurgents took control of the Syrian city of Aleppo.
Looking ahead, oil traders will be keeping an eye on the OPEC+ (Organization of the Petroleum Exporting Countries and allies) meeting on Thursday to discuss production policy for 2025. The meeting was originally scheduled for Sunday. “An indefinite delay may be the best-case scenario for oil prices, given that previous rounds of delays of a month or so have failed to boost oil prices in line with what OPEC+ intended,” said analyst Tony Sycamore. Sydney-based IG market leader.
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.
