WTI falls toward $63.00 as OPEC+ plans to increase Oil output
- WTI price depreciates due to prevailing oversupply concerns.
- OPEC+ will discuss potential production hikes for October at its policy meeting on Sunday.
- API Weekly Crude Oil Stock unexpectedly rose 0.6 million barrels versus an expected 3.4 million-barrel draw, hinting at sluggish demand.
West Texas Intermediate (WTI) Oil price extends its losses for the second consecutive day, trading around $63.20 per barrel during the Asian hours on Thursday. Crude Oil prices depreciate as reports suggest that OPEC+, the Organization of the Petroleum Exporting Countries and its allies, will consider fresh production increases in October at its policy meeting on Sunday.
The OPEC+, aiming to reclaim market share, may start unwinding 1.65 million barrels per day of output cuts, around 1.6% of global demand. The Oil cartel had already agreed to lift output targets by roughly 2.2 million barrels per day between April and September, alongside an additional 300,000 bpd quota increase for the United Arab Emirates, per Reuters.
The American Petroleum Institute (API) showed that US Weekly Crude Oil Stock rose by 0.6 million barrels, against the expectations of a 3.4 million-barrel draw, signaling weaker consumption. Fuel demand prospects were further clouded by a slowdown in the US economy. ISM Manufacturing Purchasing Managers Index (PMI) came in at 48.7 in August, falling short of the expected 49.0 reading.
Traders await Thursday’s weekly Initial Jobless Claims, the ADP Employment Change, and the ISM Services Purchasing Managers Index (PMI), seeking fresh cues on the US Federal Reserve’s (Fed) policy outlook in September. Attention will shift toward Friday’s data, including US Nonfarm Payrolls expected to add about 75,000 jobs in August, while the Unemployment Rate is expected to be seen at 4.3%.
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
Akhtar Faruqui
FXStreet
Akhtar Faruqui is a Forex Analyst based in New Delhi, India. With a keen eye for market trends and a passion for dissecting complex financial dynamics, he is dedicated to delivering accurate and insightful Forex news and analysis.
