WTI remains depressed below $68.50; OPEC+ meeting eyed for fresh impetus
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WTI drifts lower for the second successive day, though any meaningful slide seems elusive.
Concerns that geopolitical tensions can cause supply disruptions could offer some support.
Traders now look to the OPEC+ meeting for some impetus ahead of the key US NFP report.
West Texas Intermediate (WTI) US Crude Oil prices remain under some selling pressure for the second straight day on Thursday and have now reversed a major part of weekly gains. The commodity trades below mid-$68.00s, down 0.30% for the day during the Asian session, though the downside remains cushioned ahead of the OPEC+ meeting later today.
Reports suggest that the cartel will further delay plans to increase production until at least the second quarter of 2025 amid concerns over slowing oil demand, especially China – the world's top importer. Furthermore, the worsening Russia-Ukraine conflict and increasing tensions in the Middle East keep geopolitical risks premium in play, which, in turn, could act as a tailwind for Crude Oil prices.
Meanwhile, the official data released by the Energy Information Administration (EIA) on Wednesday showed that US oil inventories shrank more than expected, by 5.07 million barrels in the final week of November. Moreover, signs of US economic resilience, and hopes that US President-elect Donald Trump's expansionary policies will boost fuel demand, should limit losses for Crude Oil prices.
Traders might also refrain from placing aggressive directional bets and opt to wait for the release of the US Nonfarm Payrolls (NFP) report. The closely watched employment details will play a key role in influencing market expectations about the Federal Reserve's (Fed) rate-cut path. This, in turn, will influence the US Dollar (USD) price dynamics and provide a fresh impetus to Crude Oil prices.
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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* The content presented above, whether from a third party or not, is considered as general advice only. This article should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments.
