WTI jumps to near $59.30 as OPEC+ agrees to halt Oil supply hikes
- The Oil price rises 1.7% to near $59.30 as the OPEC+ agrees to hold the Oil supply from the first quarter of 2026.
- OPEC+ approves the mechanism that will assess members’ production capacity.
- Firm Fed dovish expectations strengthen the Oil demand outlook.
West Texas Intermediate (WTI) futures on NYMEX trade 1.7% higher around $59.30 during the Asian trading session on Monday. The Oil price attracts significant bids at open as the OPEC+ agrees to halt the Oil output increase from the first quarter of 2026.
This year, the Oil price has remained under pressure as members of the OPEC+ increased the output by 2.9 million barrels per day (bpd) into the market since April 2025. The announcement of a pause in the oil supply hike has come at a time when the United States (US) has been making efforts to bring peace to the war between Russia and Ukraine.
The US could unwind sanctions on Russia if it agrees to make peace with Ukraine. Such a scenario will prompt the global Oil supply.
Additionally, the OPEC+ has approved a mechanism that will assess members’ maximum production capacity to be used for setting output baselines from 2027, against which members’ output targets are set, Reuters reported.
Meanwhile, firm hopes of an interest rate cut by the Federal Reserve (Fed) in its monetary policy meeting this month are also supporting the Oil price. Lower interest rates by the Fed bode well for the Oil demand outlook.
According to the CME FedWatch tool, the probability of the Fed cutting interest rates by 25 basis points (bps) to 3.50%-3.75% in December is 87.4%.
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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