WTI drops below $71.50 after the first US election results
- WTI plunges to near $71.35 in Wednesday’s Asian session.
- The stronger Greenback exerts some selling pressure on the USD-denominated Oil price.
- Investors await the outcome of the US presidential election as polls were closing in the US.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $71.35 on Wednesday. The WTI price edges lower as the US presidential election polls were closing in the United States.
According to CNN, Former US President Donald Trump will win the key race of Florida, while Kamala Harris picks up Massachusetts and Maryland. Harris and Trump each need at least 270 electoral votes to win the presidency.
Meanwhile, the US Dollar (USD) rises to 104.25 versus a basket of other currencies as Trump trades continue to rally as Trump odds improve. A stronger Greenback makes oil more expensive in other countries.
On Sunday, a larger group called OPEC+, consisting of OPEC members plus other oil-producing countries, agreed to extend their oil production cut to 2.2 million barrels per day (bpd) until the end of December 2024. The countries also reiterated their commitment to “achieve full conformity” with their production targets and to compensate for any overproduction by September 2025.
The American Petroleum Institute (API) weekly report showed crude stocks rose last week. Crude oil stockpiles in the United States for the week ending November 1, increased by 3.132 million barrels, compared to a decline of 0.573 million barrels in the previous week. The market consensus estimated that stocks would increase by 1.8 million barrels.
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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