WTI wobbles around $62.20 with US NFP on the horizon
- The Oil price remains supported amid optimism that trade negotiations between the US and China will go smooth in the future.
- De-escalating US-China trade tensions is a favorable scenario for the Oil price.
- Investors await the US NFP data for fresh cues on the Fed’s interest rate outlook.
West Texas Intermediate (WTI), futures on NYMEX, trades sideways around $62.20 during European trading hours on Friday. The Oil price consolidates as investors await the United States (US) Nonfarm Payrolls (NFP) data for May, which will be published at 12:30 GMT.
Investors will pay close attention to the US official employment data as it will influence market speculation for the Federal Reserve (Fed) monetary policy outlook. Signs of cooling labor demand would force traders to raise Fed dovish bets, a scenario that will be favorable for the Oil price.
The black gold remains well-supported as the comments from US President Donald Trump in a post on Truth.Social have indicated that trade negotiations with China will be smooth in the future. “The call lasted approximately one and a half hours, and resulted in a very positive conclusion for both countries.” Trump wrote.
Meanwhile, Beijing has also confirmed that US President Trump and Chinese President Xi Jinping held a phone call on Trump's request to engage in discussions and reflect ongoing diplomatic communication amidst tensions, Xinhua news agency reported.
De-escalating trade tensions between China and the US is favorable for the Oil price, given that China is the largest importer of Oil in the world.
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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