WTI declines below $58.50 as US Dollar gains on job data, Iraq oilfield resumes
- WTI price loses ground to near $58.20 in Wednesday’s Asian session.
- Stronger US job openings data boost the US Dollar and weigh on the USD-denominated commodity price.
- Iraq resumed production at Lukoil’s West Qurna 2 oilfield after a leak on an export pipeline slashed its output.
- US crude inventories fell by 4.8 million barrels last week, said the API.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $58.20 during the Asian trading hours on Wednesday. The WTI price declines as the US Dollar (USD) strengthens following stronger job openings data from the United States (US), while Iraq resumed crude flow from Lukoil's West Qurna oil fields. Traders brace for the release of the Energy Information Administration (EIA) crude oil stockpiles report later on Wednesday.
The number of job openings on the last business day of September arrived at 7.658 million, while for October it rose to 7.67 million, the US Bureau of Labor Statistics (BLS) reported in the Job Openings and Labor Turnover Survey (JOLTS) on Tuesday. Both readings came in stronger than the market expectations and underscored a still resilient labor market. This, in turn, lifts the Greenback and weighs on the USD-denominated commodity price.
After a weekend shutdown due to a pipeline leakage, crude flow from Russian oil major Lukoil's West Qurna-2 storage tanks resumed toward the major Tuba depots. The field, which produces over 460,000 barrels per day, accounts for about 0.5% of the world's oil supply and 9% of total output in Iraq, OPEC's second-largest producer after Saudi Arabia.
On the other hand, a larger-than-expected draw in US crude oil stockpiles might help limit the WTI’s losses. Data released by the American Petroleum Institute (API) on Tuesday showed that crude oil stockpiles in the US for the week ending December 5 fell by 4.8 million barrels compared to a decline of 2.48 million barrels in the previous week. The market consensus was for a decrease of 1.7 million barrels in the reported period. Crude oil inventories in the US are so far showing a net increase of just 121,000 barrels for the year, according to Oilprice calculations of API data.
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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