WTI drifts higher above $62.00 as OPEC+ slows production growth
- WTI price gains ground to near $62.15 in Tuesday’s early Asian session.
- OPEC+ decided to add 137,000 bpd in October, a smaller increment than they’d scheduled for the previous two months.
- Traders await the API weekly crude oil stock report, which is due later on Tuesday.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $62.15 during the early Asian trading hours on Tuesday. The WTI edges higher after the Organization of Petroleum Exporting Countries and its allies (OPEC+) decided to slow the pace of production hikes compared to previous months.
OPEC+ has agreed to further raise oil production from October as its leader, Saudi Arabia, pushes to regain market share. The group decided to raise output by 137,000 barrels per day from October. This increase is significantly lower than the previous hikes of about 555,000 barrels per day in August and September and 411,000 barrels per day in June and July.
Furthermore, expectations of a tighter supply due to potential new US sanctions on Russia provide some support to the WTI price. Ukrainian officials said on Sunday that Russia carried out its largest air attack of the war on Ukraine, setting the main government building on fire in central Kyiv and killing at least four people, including an infant. US President Donald Trump said over the weekend that the administration is prepared to move to a second phase of sanctions targeting Russia or its oil buyers.
Oil traders will keep an eye on the American Petroleum Institute (API) weekly crude oil stock report, which will be published later on Tuesday. If the data shows an unexpected rise in crude inventories, this could indicate weaker demand and might cap the upside for the WTI 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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