WTI climbs above $61.50 on lower-than-expected OPEC+ output hike
- WTI price rises to near $61.55 in Monday’s Asian session.
- OPEC+ will add oil output from November by 137,000 bpd.
- Ukraine continued to intensify its attacks on Russian energy facilities.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $61.55 during the Asian trading hours on Monday. The WTI jumps after the Organization of the Petroleum Exporting Countries and its allies (OPEC+) agreed to raise production by a modest amount in November. Traders brace for the release of the American Petroleum Institute (API) weekly crude oil stock report later on Tuesday.
OPEC+ agreed to a modest increase in its November oil production as group leaders Saudi Arabia and Russia overcame a difference in position. The group will raise oil output from November by 137,000 bpd next month. OPEC+ has increased its oil output targets by more than 2.7 million bpd this year, accounting for over 2.5% of world demand.
"The price jump has primarily been boosted by OPEC+'s decision for a lower-than-expected production hike next month as the group intended to buffer the recent slump in oil markets," said independent analyst Tina Teng.
Ukraine continued to intensify its attacks on Russian energy facilities, targeting the Kirishi refinery, one of Russia's largest refineries, per Reuters. The persistent geopolitical risks between Russia and Ukraine might contribute to the WTI price’s upside.
The US will provide Ukraine with intelligence for long-range missile strikes on Russian energy infrastructure. These sources said that it will make it easier for Ukraine to hit refineries, pipelines and other infrastructure with the aim of depriving the Kremlin of revenue and oil.
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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