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WTI edges higher to near $70.00 on China stimulus, New EU sanctions against Russia

  • WTI extends its upside to $69.95 in Thursday’s early European session. 
  • A possible tightening of US sanctions on Russian oil and further China stimulus measures lift the WTI price. 
  • OPEC cuts demand growth outlook for 2024-2025 for five months in a row. 

West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $69.95 on Thursday. The WTI price edges higher amid concerns over sluggish global demand growth and possible tighter sanctions on Russia and Iran.

The Biden administration on Wednesday is considering stricter sanctions on Russia’s oil trade to increase pressure on the Kremlin, just weeks before Donald Trump returns to the White House, per Bloomberg. Additionally, the European Union agreed on a new round of sanctions against Russia on Wednesday because of its ongoing war in Ukraine. This, in turn, could tighten global crude supplies and lift the WTI price. 

Growing expectations of further China stimulus contribute to the WTI’s price. Chinese authorities said on Monday it would adopt an "appropriately loose" monetary policy in 2025 as Beijing tries to boost its economy with the first easing of its stance in 14 years. "This has sparked optimism in the oil market, with traders hopeful that these initiatives could drive higher oil consumption," said Li Xing Gan, financial markets strategist consultant to Exness.

A fall in US crude inventories last week might underpin the black gold price. The US Energy Information Administration (EIA) weekly report showed Crude oil stockpiles in the United States for the week ending December 6 declined by 1.425 million barrels, compared to a fall of 5.073 million barrels in the previous week. The market consensus estimated that stocks would decrease by 1.1 million barrels. 

On the other hand, OPEC cut its forecasts for demand growth in 2024 and 2025 for the fifth straight month on Wednesday. "OPEC are squaring up to reality about what they are facing, the (demand growth forecast) cuts highlight that they have their hands full in terms of trying to balance this market heading into 2025," said John Kilduff, partner at Again Capital in New York.

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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Lallalit Srijandorn

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.

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