- WTI prices could see an increase due to rising fuel demand and declining US inventories.
- The EIA crude oil stocks change decreased by 4.471 million barrels last week, compared with a decrease of 1.2 million barrels.
- Oil prices are facing downward pressure amid skepticism over the effectiveness of China’s stimulus measures in sufficiently boosting its economy.
West Texas Intermediate (WTI) crude oil prices remain subdued, trading near $69.60 per barrel during Asian trading hours on Thursday. However, crude oil prices could rise due to increased fuel demand and reduced inventories in the United States, the world’s largest oil consumer. The US Energy Information Administration (EIA) reported a significant drop in US crude oil inventories, with a decline of 4.471 million barrels in the week ending September 20, exceeding the anticipated decline of 1.2 million barrels.
Crude oil prices fell on Wednesday as concerns about potential supply disruptions in Libya eased. Delegates from Libya’s divided east and west reached an agreement on the process for appointing a central bank governor, a key step toward resolving the ongoing conflict over control of the country’s oil revenues, which has previously disrupted exports, according to Reuters.
Oil prices are facing challenges as traders reassess the effectiveness of China’s stimulus plans in significantly boosting the economy of the world’s largest oil importer. On Tuesday, People’s Bank of China (PBOC) Governor Pan Gongsheng announced the reduction of the required reserve requirement ratio (RRR) by 50 basis points (bps). Gongsheng also noted that the central bank would cut the seven-day repo rate to 1.5% from 1.7%, and reduce the down payment for second homes to 15% from 25%. Bloomberg and Reuters reported that China is considering injecting an additional $142 billion of capital into major banks.
The fall in crude oil prices may be limited by escalating tensions in the Middle East. An Israeli airstrike in Beirut killed a senior Hezbollah commander on Tuesday, raising fears of a wider conflict as cross-border rocket attacks intensified. Meanwhile, the United States, France and several allies have called for an immediate 21-day ceasefire along the Blue Line border between Israel and Lebanon and expressed support for a ceasefire in Gaza, following intense discussions at the United Nations on Wednesday.
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.
