WTI hovers around $68.00 due to supply disruptions caused by Tropical Storm Francine
- WTI price holds its position due to operations closure at Brownsville and other smaller Texas ports on Monday.
- National Hurricane Center’s data indicate that at least 125,000 barrels per day of Oil production is at risk of disruption.
- APPEC conference speakers noted that China’s sluggish economy is slowing Oil demand growth.
West Texas Intermediate (WTI) Oil price remains steady at around $68.00 per barrel during Tuesday's Asian trading session. Crude Oil prices are being bolstered by supply disruptions caused by Tropical Storm Francine. According to a note from ANZ analysts, citing data from the National Hurricane Center (NHC), "At least 125,000 barrels per day (bpd) of Oil production is at risk of disruption."
The US Coast Guard ordered the closure of all operations at Brownsville and other smaller Texas ports on Monday evening as Tropical Storm Francine swept across the Gulf of Mexico. While the port of Corpus Christi remained open, it operated under restrictions, according to Reuters.
Tropical Storm Francine is expected to strengthen into the fourth hurricane of the Atlantic season, which concludes on November 30. The National Hurricane Center predicts Francine could develop into a Category 1 hurricane, with winds reaching up to 85 mph (137 kph), before making landfall on the Louisiana coast by Wednesday evening.
Reuters reported that global commodity traders Gunvor and Trafigura expect Oil prices to range between $60 and $70 per barrel, driven by weakened Chinese demand and ongoing global oversupply. According to speakers at the APPEC conference on Monday, China’s transition toward lower-carbon fuels, combined with a sluggish economy, is slowing Oil demand growth in the world’s largest crude importer.
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 13 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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