WTI consolidates around mid-$65.00s, just above one-week low set on Monday
- WTI struggles to gain any meaningful traction amid a combination of diverging forces.
- Concerns about lower Russian supply offset OPEC+’s supply increase and lend support.
- The emergence of some USD buying caps Crude Oil prices and warrants caution for bulls.
West Texas Intermediate (WTI) US Crude Oil prices extend the sideways consolidative price move heading into the European session on Tuesday and remain close to a one-week low touched the previous day. The commodity currently trades just above mid-$65.00s, nearly unchanged for the day, amid mixed fundamental cues.
The Organization of the Petroleum Exporting Countries and its allies – together known as OPEC+ – agreed on Sunday to raise oil production by 547,000 barrels per day for September. This comes despite a weak demand outlook. Moreover, Friday's weaker-than-expected US jobs report fueled economic concerns amid US President Donald Trump's erratic trade policies, which, in turn, act as a headwind for Crude Oil prices.
Meanwhile, worries about the potential for lower supply from Russia due to US sanctions mitigate the aforementioned negative factor and hold back traders from placing aggressive bearish bets around the commodity. In fact, US President Donald Trump warned of increasing levies on India over its purchases of Russian crude, ahead of the looming deadline for Moscow to come to the table for a ceasefire with Ukraine.
This, in turn, warrants some caution before placing aggressive directional bets around Crude Oil prices. Traders now look to the release of the US ISM Services PMI, which could influence the US Dollar (USD) and provide some impetus to the commodity. In the meantime, the growing acceptance that the Federal Reserve (Fed) will resume its rate-cutting cycle in September could cap the intraday USD positive move.
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.
Author
Haresh Menghani
FXStreet
Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.
