WTI climbs above $61.00 as OPEC+ signals output increase pause
- WTI price jumps to near $61.10 in Monday’s early Asian session.
- OPEC+ agreed to boost oil production next month, but signaled they would soon pause the output increase.
- Ukrainian drone strike hit a key Russian oil port.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $61.10 during the early Asian trading hours on Monday. The WTI rises after the Organization of the Petroleum Exporting Countries and its allies (OPEC+) signaled a pause in output increase. Traders brace for the American Petroleum Institute (API) crude oil stocks change report later on Tuesday.
OPEC+ on Sunday said it planned to pause output increases in the first quarter (Q1) of 2026, following another modest hike for next month. The group would raise production by about 137,000 barrels a day (bpd) in December, matching hikes scheduled for October and November. The move came as the market faces the prospect of a ballooning oversupply that has been seen over the past three months.
Furthermore, geopolitical tensions in the Middle East and Black Sea could boost the WTI price. Reuters reported over the weekend that a Ukrainian drone attack struck one of Russia's main Black Sea oil ports on Sunday, causing a fire and damaging at least one ship, as Kyiv attempts to undermine Russia's war effort by targeting its energy infrastructure. The area is home to a major refinery run by Rosneft PJSC, which was sanctioned last month by the US, along with Lukoil PJSC.
On the other hand, the hawkish remarks from the Federal Reserve (Fed) policymakers could lift the US Dollar (USD) and weigh on the USD-denominated commodity price as it makes crude more expensive for foreign buyers. The Fed delivered a 25 basis points (bps) rate cut at its October meeting last week, lowering the federal funds rate to a target range of 3.75% to 4.00%. Fed Chair Jerome Powell said during the press conference that this might be the last rate cut this year, tempering market expectations for a further reduction in December.
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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