WTI price rebounds above $56.00 as EIA reports sharp inventory decline
- WTI price rebounds to near $56.30 in Thursday’s Asian session.
- US crude stocks dropped by 3.831 million barrels last week, the EIA said.
- Trump said Venezuela would export $2 billion worth of oil to the United States.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $56.30 during the Asian trading hours on Thursday. The WTI price recovers some lost ground as the crude oil inventories report shows a sharper decline than anticipated. Traders will take more cues from the US jobs data for December, which will be published later on Friday.
According to the US Energy Information Administration (EIA) weekly report, crude oil stockpiles in the US for the week ending January 2 fell by 3.831 million barrels, compared to a decline of 1.934 million barrels in the previous week. The market consensus estimated that stocks would rise by 1.1 million barrels. A larger-than-expected crude oil inventory draw indicates stronger demand and generally boosts the WTI price in the near term.
Nonetheless, the upside for the black gold might be limited following US President Donald Trump's deal to import up to $2 billion worth of Venezuelan crude. The US energy secretary stated that the Trump administration needs to control Venezuela's oil sales and revenue indefinitely to stabilize that country's economy and rebuild its oil sector. U.S. forces ousted Venezuela's leader, Nicolas Maduro, in a raid on the capital, Caracas, on Saturday.
The US employment report for December will be in the spotlight later on Friday. The US economy is projected to see 60,000 job additions in December, while the Unemployment Rate is forecast to tick lower to 4.5% during the same period. Any signs of weakness in the US labor market could drag the US Dollar (USD) lower and support the USD-denominated commodity price.
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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