WTI rises above $62.00 as OPEC+ holds oil quotas
- WTI edges higher to around $62.15 in Thursday’s early Asian session, adding 0.88% on the day.
- OPEC+ kept its output policy unchanged; attention will shift to the July OPEC+ output decision.
- Oil inventories fell by 4.236 million barrels in the week ended May 23, according to the API.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $62.15 during the Asian trading hours on Thursday. The WTI price edges higher on supply concerns after OPEC+ agreed to leave their output policy unchanged.
The Organization of the Petroleum Exporting Countries and its allies (OPEC+) agreed to leave their formal output quotas unchanged. OPEC+ nations said they decided to “reaffirm the level of overall crude oil production for OPEC and non-OPEC Participating Countries” as agreed during the December meeting. The WTI price gains momentum after the meeting. A separate meeting on Saturday of OPEC+ countries is expected to decide on an increase in oil output for July.
The American Petroleum Institute (API) weekly report showed crude oil stockpiles in the US for the week ending May 23 fell by 4.236 million barrels, compared to a rise of 2.499 million barrels in the previous week. So far this year, crude oil inventories are up more than 21 million barrels, according to calculations of API data.
Optimism that trade deals will brighten the US economic outlook could boost the Greenback. This, in turn, might weigh on the USD-denominated commodity price. Oil traders will take more cues from the EIA Crude Oil Stocks weekly report due later on Thursday, along with the second estimate of the US Q1 Gross Domestic Product (GDP) Growth Rate.
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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