WTI extends upside to near $62.00 as OPEC+ signals cautious production hike
- WTI price trades in positive territory for the fourth consecutive day near $61.95 in Wednesday’s early European session.
- OPEC+ approved a modest increase of 137,000 barrels per day for November.
- US crude inventories climbed by 2.78 million barrels last week, the API noted.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $61.95 during the early European trading hours on Wednesday. The WTI extends the rally after the Organization of the Petroleum Exporting Countries and its allies (OPEC+) opt for a modest production increase. Traders await the release of the US Energy Information Administration (EIA) stockpiles report later on Wednesday.
OPEC+ approved 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.
About the data, the American Petroleum Institute (API) reported on Tuesday 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.
Traders will closely monitor the FOMC Minutes later on Wednesday for more cues about the US interest rate outlook. Also, the Federal Reserve officials are set to speak later on the same day, including Alberto Musalem, Michael Barr, Austan Goolsbee, Lorie Logan and Neel Kashkari. Any hawkish remarks from Fed policymakers could lift the US Dollar (USD) and weigh on the USD-denominated commodity price in the near term.
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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