WTI attracts some buyers above $62.00 on weaker US Dollar, modest OPEC+ output hike decision
- WTI price edges higher to near $62.15 in Tuesday’s early European session.
- OPEC+ members agreed to lift output by 137,000 bpd from October.
- Trump said European leaders will visit the US over the Russia-Ukraine conflict.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $62.15 during the early Asian trading hours on Tuesday. The WTI trades in positive territory for the second consecutive day on a weaker US Dollar (USD) after the Organization of Petroleum Exporting Countries and its allies (OPEC+) raised its production at a lower rate than expected.
OPEC+ agreed on Sunday to raise its crude production by 137,000 barrels per day (bpd), starting in October. This increase is significantly lower than the 555,000 bpd that the group decided to boost output in September and August and the 411,000 bpd in June and July.
Additionally, the new potential sanctions on buyers of Russian oil could disrupt crude flows and contribute to the WTI’s upside. US President Donald Trump said on Sunday that the administration is prepared to move to a second phase of sanctions targeting Russia or its oil buyers. Trump added that individual European leaders would visit the US on Monday and Tuesday to discuss how to resolve the conflict.
"Expectations of tighter supply from potential new U.S. sanctions on Russia are also lending support," said Toshitaka Tazawa, an analyst at Fujitomi Securities.
Oil traders brace for the release of the American Petroleum Institute (API) weekly crude oil stock report, which will be published later on Tuesday. On Wednesday, the attention will shift to the US Producer Price Index (PPI) inflation data for August. In case of a hotter-than-expected inflation, this could lift the Greenback 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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