WTI declines to near $61.00 as OPEC+ to raise production at next meeting
- WTI price attracts some sellers near $61.15 in Tuesday’s Asian session.
- OPEC+ is set to make another modest increase in oil output for December.
- Renewed US sanctions on Russia and geopolitical risks might help limit the WTI’s losses.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $61.15 during the Asian trading hours on Tuesday. The WTI drifts lower as the Organization of the Petroleum Exporting Countries and its allies (OPEC+) is expected to increase oil output once again for December.
According to the latest Bloomberg report citing two delegates from the cartel, OPEC+ intends to vote on raising production by an additional 137,000 barrels per day (bpd). While the base scenario assumes restoring output to around 1.66 million bps, there is still no consensus on the pace of further expansion. The group's plans to increase oil output could drag the WTI price lower in the near term.
On the other hand, hopes of a trade deal framework between the US and China might help limit the WTI’s losses. US Treasury Secretary Scott Bessent said on Sunday that the agreement would remove the threat of 100% tariffs on Chinese imports set to take effect on November 1 and would include “a final deal” on the sale of TikTok in the US.
The White House confirmed last week that Trump will meet his Chinese counterpart Xi Jinping, in South Korea on Thursday on the sidelines of an Asian summit. Positive developments to defuse trade tensions between the world's two largest economies could boost oil-demand sentiment and support the oil prices.
Additionally, the WTI price receives support from renewed US sanctions on Russia and geopolitical risks. Last Wednesday, the Trump administration announced sanctions on Rosneft and Lukoil, Russia's biggest oil producers, due to Russia's lack of serious commitment to a peace process to end the war in Ukraine.
“The United States hit Russia's major oil companies with sanctions on Wednesday, which could hurt Russia's oil exports if enforced and be a positive for crude prices,” said Dennis Kissler, senior vice president of trading at BOK Financial.
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of 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 via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US 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) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
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