- WTI price is trading sideways around $68.85 in the early Asian session on Friday.
- The ongoing conflict between Russia and Ukraine highlighted risks to Russian oil supplies, which could drive up the price of WTI.
- OPEC+ postpones its next production policy meeting to December 5 from December 1.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $68.85 on Friday. The price of WTI stabilizes as the escalation of the conflict between Russia and Ukraine offsets a less aggressive expectation of a rate cut by the Federal Reserve (Fed).
Oil traders will closely monitor developments in the conflict between Russia and Ukraine. Any signs of escalation could raise concerns over energy supplies, particularly winter gas flows to Central and Eastern Europe, boosting the price of WTI. On Thursday, Russian President Vladimir Putin said that if Ukraine obtains nuclear weapons, Russia will use all means of destruction.
US economic data on Wednesday suggested that progress in reducing inflation appears to have stalled in recent months, which could dampen expectations that the Federal Reserve (Fed) will cut interest rates in 2025. However, the Fed is expected to keep rates unchanged at its January and March meetings. It should be noted that slower-than-expected rate cuts would keep borrowing costs high, which could slow economic activity and reduce oil demand.
The Organization of the Petroleum Exporting Countries and its allies (OPEC+) postponed their December meeting, fueling speculation about delays in production increases and supply adjustments. OPEC+, which accounts for about half of global oil production, is scheduled to meet on December 5 after delaying its previous meeting.
Key considerations include whether to extend voluntary production cuts of 2.2 million barrels per day scheduled to be phased out in December. Reports suggest members are considering delaying production increases planned for January amid lingering uncertainties over demand. A further delay has already been largely factored into oil prices, said Suvro Sarkar at DBS Bank. “The only question is whether it’s a one-month postponement, or three months, or even longer.”
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.
