WTI holds remains subdued around $60.00 due to oversupply concerns
- WTI price struggles amid oversupply concerns ahead of OPEC+ meeting.
- OPEC+ members plan to increase production by 137,000 barrels per day in December.
- Indian Oil Corp has bought five cargoes of Russian Oil for December delivery from non-sanctioned suppliers.
West Texas Intermediate (WTI) Oil price remains subdued for the second successive session, trading around $60.00 per barrel during the Asian hours on Friday. Crude Oil prices are on track to post their third consecutive monthly decline, driven by the oversupply concerns ahead of the Organization of the Petroleum Exporting Countries and its allies, including Russia, known as OPEC+, meeting.
Eight OPEC+ members are reportedly planning to increase production by 137,000 barrels per day in December as part of their strategy to reclaim market share. Additionally, Saudi Arabia’s crude exports reached a six-month high of 6.41 million barrels per day in August, and further increases are anticipated. The Energy Information Administration (EIA) reported in its weekly Petroleum Status Report on Wednesday, indicating a record US output of 13.6 million bpd last week.
Oversupply concerns have helped offset the impact of recent US sanctions on major Russian Oil producers, as investors monitor how the measures will affect exports to key buyers such as India and China. However, traders reported that Indian Oil Corp has purchased five cargoes of Russian Oil for December delivery from non-sanctioned suppliers, resuming imports despite pressure from Washington to halt purchases of Russian crude, per Reuters.
US President Donald Trump announced on Thursday that China has agreed to begin purchasing US energy, with expectations of significant Oil and gas imports from Alaska. However, analysts remained skeptical about whether the US-China trade deal would meaningfully boost Chinese demand for US energy.
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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