WTI recovers to above $65.50 as US crude inventories drop
- WTI price rebounds to around $65.65 in Wednesday’s early Asian session.
- US crude oil inventories fell by 4.2 million barrels last week, said API.
- Rising OPEC+ supply might cap the WTI’s upside.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $65.65 during the early Asian trading hours on Tuesday. The WTI recovers some lost ground after the American Petroleum Institute (API) showed US crude oil inventories fell last week. Oil traders brace for the US Energy Information Administration (EIA) Crude Oil stockpiles report, which is due later on Wednesday.
US crude oil inventories fell last week, providing some support to the WTI price. The American Petroleum Institute (API) weekly crude oil stock report showed crude oil stockpiles in the US for the week ending August 1 fell by 4.2 million barrels, compared to an increase of 1.539 million barrels in the previous week. The market consensus estimated that stocks would decline by 1.8 million barrels.
However, the upside for the black gold might be capped amid the Organization of Petroleum Exporting Countries and allies (OPEC+) output hikes. OPEC+ met virtually on Sunday, agreeing to boost oil production by 547K barrels per day (bps) for September as concerns mount over potential supply disruptions linked to Russia.
The group began increasing output in April with a modest hike of 138K bpd, followed by larger-than-expected rises of 411K bpd in May, June, and July, 548K bpd in August, and now 547K bpd for September.
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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