WTI drifts higher above $59.50 on weaker US Dollar, fears of oil glut might cap its upside
- WTi price recovers to near $59.60 in Friday’s Asian session.
- Crude oil stockpiles in the US climbed by 5.202 million barrels last week, noted EIA.
- Russia has halted fuel exports at the Black Sea refinery.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $59.60 during the Asian trading hours on Friday. The WTI recovers some lost ground on the weaker US Dollar (USD). However, the potential upside might be limited amid increasing excess supply concerns.
Traders' concerns increase about surplus oil flooding the market, weighing on the WTI price. Data released by the US Energy Information Administration (EIA) on Wednesday showed that crude oil stockpiles in the US for the week ending October 31 climbed by 5.202 million barrels compared to a fall of 6.858 million barrels in the previous week.
Earlier this week, the American Petroleum Institute (API) revealed that the US crude oil inventories increased by 6.5 million barrels for the week ending October 31 following a 4 million barrel draw in the previous week.
Nonetheless, the WTI price receives some support from recent reports that the US military may be on the verge of launching military strikes on Venezuela, which is the world's 12th largest oil producer. Additionally, reduced crude exports from Russia might also lift the black gold. Russia's Black Sea port of Tuapse has suspended fuel exports, while its oil refinery halted crude processing after Sunday's Ukrainian drone attacks on its infrastructure, according to two industry sources and LSEG ship tracking data.
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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