WTI drops below $69.00 amid demand fears and uncertainty over OPEC+ production
- WTI price falls to fresh YTD lows of $68.85 in Thursday’s early Asian session.
- OPEC+ could delay the planned oil output increase.
- Concerns of weak demand from China weigh on the WTI price.
West Texas Intermediate (WTI), the US crude Oil benchmark, is trading around $68.85 on Thursday. WTI price remains under selling pressure and hits the lowest level since December 13, 2023, due to a negative outlook about oil demand in the coming months.
The Organization of the Petroleum Exporting Countries and allies, or OPEC+, was discussing delaying an oil output increase scheduled to start in October as Libyan production is expected to rise. “With demand growth uncertain and significant supply outages looking unlikely, all eyes are again on OPEC+,” said Svetlana Tretyakova, senior analyst at Rystad Energy.
The recent weaker Chinese economic data has prompted concerns about the economic outlook of the world's biggest crude importer. Chinese NBS manufacturing activity fell to a six-month low in August, while the Caixin Manufacturing PMI released on Wednesday came in worse than expected.
The US crude inventories fell significantly last week. According to the American Petroleum Institute (API), crude oil stockpiles in the United States for the week ending August 30 declined by 7.8 million barrels, compared to a decrease of 3.4 million barrels in the previous week. The market consensus estimated that stocks would decline by just 0.9 million barrels.
Looking ahead, traders will keep an eye on the US ISM Services PMI and weekly EIA Crude Oil stockpiles report, which are due later on Thursday. On Friday, US Nonfarm Payrolls (NFP) for August will take center stage.
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 13 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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