WTI declines to near $61.50 on EIA crude oil inventories surge
- WTI price drifts lower to near $61.70 in Thursday’s Asian session.
- OPEC+ agreed on a modest increase of 137,000 barrels per day for November.
- US crude inventories climbed by 3.715 million barrels last week, the EIA noted.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $61.70 during the Asian trading hours on Thursday. The WTI edges lower amid a larger-than-expected crude inventory build. Traders will take more cues from the speech by Federal Reserve (Fed) Chair Jerome Powell later on Thursday.
The US Energy Information Administration (EIA) reported on Wednesday that crude oil stockpiles in the US for the week ending October 3 climbed by 3.715 million barrels compared to an increase of 1.792 million barrels in the previous week. Analysts estimated that stocks would rise by 2.25 million barrels.
On the other hand, the WTI price received some support after the Organization of the Petroleum Exporting Countries and its allies (OPEC+) agreed to a smaller-than-expected increase in its crude production levels. The group will raise oil output from November by 137,000 barrels per day (bpd), below market expectations of as much as a 500,000 bpd boost to production.
Additionally, persistent geopolitical risks in Ukraine could lead to additional sanctions on Russian energy exports, lifting the WTI price. The US proposed that the G7 allies impose tariffs as high as 100% on China and India for their purchases of Russian oil in an effort to convince Russia to end the war in Ukraine.
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
Lallalit Srijandorn
FXStreet
Lallalit Srijandorn is a Parisian at heart. She has lived in France since 2019 and now becomes a digital entrepreneur based in Paris and Bangkok.
