- WTI extends its rise to $69.95 in the early European session on Thursday.
- A possible tightening of US sanctions on Russian oil and new stimulus measures in China lift the price of WTI.
- OPEC cuts demand growth outlook for 2024-2025 for the fifth consecutive month.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $69.95 on Thursday. WTI price rises amid concerns about slow global demand growth and possible tougher sanctions on Russia and Iran.
The Biden administration is considering tougher sanctions on Russia’s oil trade on Wednesday to increase pressure on the Kremlin, just weeks before Donald Trump returns to the White House, according to Bloomberg. Additionally, the European Union agreed to a new round of sanctions against Russia on Wednesday over its ongoing war in Ukraine. This, in turn, could tighten global crude oil supply and raise the price of WTI.
Rising expectations of more stimulus in China contribute to WTI price. Chinese authorities said on Monday they would adopt “appropriately loose” monetary policy in 2025 as Beijing seeks to boost its economy with the first easing of its stance in 14 years. “This has generated optimism in the oil market, with traders hopeful that these initiatives can drive higher oil consumption,” said Li Xing Gan, consulting financial market strategist at Exness.
A drop in US crude oil inventories last week could support the price of black gold. The weekly report from the US Energy Information Administration (EIA) showed that crude oil stockpiles in the United States for the week ending December 6 decreased by 1.425 million barrels, compared with a drop of 5.073 million barrels in the previous week. The market consensus estimated that reserves would decrease by 1.1 million barrels.
Separately, OPEC cut its demand growth forecasts for 2024 and 2025 for the fifth consecutive month on Wednesday. “OPEC is facing the reality of what they are facing, the cuts to demand growth forecasts highlight that they have their hands full in terms of trying to balance this market going into 2025,” said John Kilduff, partner at Again Capital in New York.
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.
