WTI attracts some sellers below $68.00 as OPEC+ plans to increase production
- WTI remains under selling pressure around $67.70 in Tuesday’s early European session.
- OPEC+ said it will proceed with a plan to increase oil production from April.
- US tariff threats and peace talks on Russia-Ukraine also weigh on the WTI price.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $67.70 during the early European session on Tuesday. The WTI price edges lower to near a 12-week low on reports that OPEC+ will proceed with a planned oil output increase in April.
The Organization of the Petroleum Exporting Countries and allies (OPEC+) said it will proceed with a plan to increase oil production from April. This increase follows a series of output cuts made by OPEC+ to stabilize the market.
Additionally, the possible peace talks on the Russia-Ukraine and US tariff threats might contribute to the WTI’s downside. Trump confirmed on Monday that tariffs on Canada and Mexico would go into effect on Tuesday. The measures of Trump had previously reaffirmed the new March date after having initially set it for April.
"Crude oil is under siege on multiple fronts and is vulnerable to the latest bearish headline or economic data," said Bob Yawger, director of energy futures at Mizuho.
On the other hand, the weaker-than-expected US economic data might drag the Greenback lower and help limit the USD-denominated commodity’s losses. The US ISM Manufacturing Purchasing Managers' Index (PMI) came in below the market consensus, falling to 50.3 in February from 50.9 in January.
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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