WTI drifts higher to near $62.00 amid mixed API inventory data
- WTI price attracts some buyers to near $61.90 in Wednesday’s Asian session.
- US crude inventories rose by 2.78 million barrels in the week ending October 3, the API said.
- Weak demand concerns amid the ongoing US government shutdown might cap the upside for the WTI.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $61.90 during the Asian trading hours on Wednesday. The WTI edges higher after a mixed US inventories report. Traders brace for the US Energy Information Administration (EIA) stockpiles report later on Wednesday.
Data released by the American Petroleum Institute (API) on Tuesday revealed that crude oil stockpiles in the US for the week ending October 3 rose by 2.78 million barrels compared to a fall of 3.674 million barrels in the previous week. Analysts estimated that stocks would increase by 2.25 million barrels.
So far this year, net crude oil inventories have risen by just 557,000 barrels, according to Oilprice calculations of API data. Meanwhile, gasoline inventories fell by 1.245 million barrels in the week ending October 3, after rising 1.3 million barrels in the week prior.
WTI price also receives some support from the output hike. The Organization of the Petroleum Exporting Countries and its allies (OPEC+) agreed to a smaller-than-expected rise in its crude production levels, easing some fears of a growing supply glut. The group will raise oil output from November by 137,000 barrels per day (bpd), below market expectations of as much as a 500,000 bpd boost to production.
On the other hand, the US government shutdown entered its eighth day as US senators failed to pass spending proposals to reopen the federal government. US President Donald Trump said that his administration would begin laying off federal workers if the shutdown persists beyond Monday. A prolonged shutdown could weigh on US economic growth. WTI prices tend to fall when economic activity weakens, implying reduced oil consumption.
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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