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WTI remains sluggish near $68.00 as OPEC+ plans to increase output in December

  • WTI Oil prices receive downward pressure as OPEC+ is likely to increase output by 180,000 barrels per day in December.
  • The US has purchased 6 million barrels of oil for the Strategic Petroleum Reserve, with delivery scheduled through May 2025.
  • Israel has declared a “limited” ground operation aimed at Hezbollah positions in the southern Lebanon border area.

West Texas Intermediate (WTI) Oil price maintains position around $68.00 per barrel during the Asian session on Tuesday. Crude Oil prices are muted as expectations of increased supply and sluggish global demand growth offset concerns over supply disruptions amid the escalating Middle East conflict.

OPEC+, which includes the Organization of the Petroleum Exporting Countries and its allies like Russia, is set to increase output by 180,000 barrels per day (bpd) in December. According to a report from the Financial Times, citing unnamed sources familiar with Saudi Arabia's plans, the kingdom is determined to resume production on December 1, even if it leads to a temporary decline in prices.

Oil prices faced downward pressure due to weaker-than-expected demand growth this year, especially in China, the world’s largest crude importer. These demand concerns were further heightened by data indicating a decline in manufacturing activities in China for September. On Monday, the Caixin Manufacturing Purchasing Managers' Index (PMI) dropped to 49.3 in September, signaling a contraction, compared to 50.4 in August.

The United States (US) has acquired 6 million barrels of Oil for the Strategic Petroleum Reserve (SPR) for delivery through May 2025. This purchase is part of an initiative to replenish stockpiles following President Joe Biden's directive in 2022 for the largest-ever sale from the reserve, totaling 180 million barrels.

US crude Oil and fuel stockpiles were projected to have decreased by approximately 2.1 million barrels during the week ending September 27, according to a preliminary Reuters poll released on Monday. The poll was conducted ahead of reports from the American Petroleum Institute (API) and the US Energy Information Administration (EIA), both set to release data on crude Oil stock changes for the same period on Tuesday.

Israel has announced a “limited” ground operation targeting Hezbollah positions in the southern Lebanon border region, with troops crossing into the area, according to local news agency Al Jazeera. In addition, Israeli warplanes launched extensive airstrikes on southern Beirut after civilians were instructed to evacuate. On Monday, Israeli attacks in Lebanon resulted in the deaths of at least 95 people.

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

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.

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