- WTI remains lower near a two-week low and is pressured by a combination of factors.
- Easing fears of supply disruptions and concerns about demand continue to weigh on the black liquid.
- Expectations of smaller rate cuts from the Fed support the USD and support prospects for a further decline.
The US West Texas Intermediate (WTI) crude oil price struggles to capitalize on the modest overnight rebound from the $69.25 area, or a two-week low, and attracts some sellers during the Asian session on Wednesday. The commodity is currently trading around the $70.25 region, down 0.30% on the day, and appears vulnerable to further decline.
Despite concerns about an escalation of the conflict in the Middle East, reports that Israel would not attack Iranian nuclear and oil sites eased fears of a supply disruption. This comes on top of a drop in China’s oil imports for the fifth straight month, raising concerns about weak demand in the world’s biggest importer. Additionally, OPEC lowered its global oil demand growth forecast for 2024 and 2025, which in turn validates the negative outlook for crude oil prices.
Meanwhile, the US dollar (USD) remains firm near its highest level since August 8 amid growing expectations of less aggressive easing policy by the Federal Reserve (Fed) and bets on a regular cut. of interest rates of 25 basis points (bp) in November. A stronger dollar tends to undermine demand for USD-denominated commodities and supports the prospects of an extension of the recent decline from near the $78.00 mark, or the monthly peak reached last week.
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.
