- WTI price falls near $69.70 in the early Asian session on Wednesday.
- Chinese economic data stoked demand concerns, weighing on the WTI price.
- US crude oil inventories fell by about 4.7M barrels last week, the API showed.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $69.70 on Wednesday. WTI price declines amid renewed concerns about Chinese demand. Investors remain cautious ahead of the US Federal Reserve’s (Fed) interest rate decision on Wednesday.
Disappointing Chinese retail sales raised concerns about weakness in consumer spending in China, the world’s largest oil importer. “The bearish momentum generated by the China data destroyed any hopes speculators had of breaking out of the two-month range to the upside,” said Robert Yawger, head of the energy futures division at Mizuho Securities USA.
Oil traders await the Fed’s last policy meeting of the year on Wednesday. The market has already priced in a 25 basis point (bp) interest rate cut, but the focus will be on the Fed’s future guidance on rate policy for 2025 and 2026. Any sign of a less easing cycle Aggressive action by the Fed could boost the dollar and drag the price of the USD-denominated commodity down.
A decline in US crude inventories last week could help limit WTI’s losses. The weekly report from the American Petroleum Institute (API) showed that US crude oil inventories for the week ending December 13 fell by 4.7 million barrels, compared with an increase of 499,000 barrels in the previous week. The market consensus estimated that inventories would decrease by 1.85 million barrels.
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.
