WTI recovers above $62.00 as OPEC+ agrees to raise output at a slower pace from October
- WTI price recovers some lost ground to near $62.15 in Monday’s Asian session.
- OPEC+ agreed to lift output from October by 137,000 bpd.
- Trump said he is not happy with the Russia-Ukraine situation.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $62.15 during the early Asian trading hours on Monday. The WTI edges higher, snapping the three-day losing streak after the Organization of the Petroleum Exporting Countries and its allies (OPEC+) agreed over the weekend to raise output at a slower pace from October on expectations of weaker global demand.
Bloomberg reported on Sunday that OPEC+ has agreed to further raise oil production from October as its leader, Saudi Arabia, pushes to regain market share. The group agreed to raise output by 137,000 barrels per day, down sharply from the larger hikes of recent months due to an anticipated weakening of global demand.
"The oil market rebounded slightly, supported by relief over OPEC+'s modest output hike and a technical bounce following last week's decline," said Toshitaka Tazawa, an analyst at Fujitomi Securities.
Additionally, the escalating tensions between Russia and Ukraine boost the WTI price. Ukrainian officials said on Sunday that Russia carried out its largest air attack of the war on Ukraine, setting the main government building on fire in central Kyiv and killing at least four people, including an infant.
US President Donald Trump said on Sunday that individual European leaders would visit the United States (US) on Monday or Tuesday to discuss how to resolve the Russia-Ukraine war. Trump added that he was "not happy" about the status of the Russia-Ukraine war but expressed optimism that the war would soon be settled.
Oil traders brace for the American Petroleum Institute (API) weekly crude oil stock report, which is due later on Tuesday. If the data shows an unexpected rise in crude inventories, this could indicate weaker demand and might weigh on the WTI price.
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.
