WTI retreats as OPEC+ production pause offset by US Dollar rally
- WTI retreats toward $60.40 after briefly rising above $61.00 earlier in the day.
- OPEC+ confirms a limited production hike for December but plans to pause further increases in Q1 2026.
- The US Dollar extends its rally, hitting a fresh three-month high, weighing on dollar-denominated commodities.
West Texas Intermediate (WTI US Oil trades around $60.45 on Monday at the time of writing, down 0.40% on the day, after briefly touching $61.29 earlier in the day. The pullback comes as the US Dollar (USD) strengthens and risk sentiment remains subdued, despite OPEC+ signaling a pause in production increases next year.
On Sunday, the Organization of the Petroleum Exporting Countries and its allies (OPEC+) agreed to raise output by 137,000 barrels per day in December, while confirming that it would halt additional hikes during the first quarter of 2026. The decision reflects the group’s intention to prevent a new supply glut early next year, as inventories have risen notably in recent months. According to Reuters, this cautious stance shows OPEC+’s effort to “protect prices and maintain market stability” amid lingering demand concerns.
Geopolitical risks continue to support Crude Oil prices to some extent. Over the weekend, a Ukrainian drone strike hit one of Russia’s main Black Sea Oil ports, setting a fire and damaging a vessel. The attack heightens concerns about supply security, particularly as Russia, already under fresh Western sanctions targeting the main Oil companies Rosneft and Lukoil, struggles to sustain its export capacity.
However, the strength of the US Dollar is limiting Crude Oil's upside. The Greenback remains near its strongest levels in three months after Federal Reserve (Fed) Chair Jerome Powell downplayed the likelihood of another rate cut in December. Powell stated that a December cut is “far from a foregone conclusion,” noting that policymakers held “strongly different views” at last week’s meeting.
The CME FedWatch tool shows that the chances of a 25-basis-point rate cut in December have dropped to 69% from over 90% before the Fed’s meeting. This shift in expectations has fueled a renewed rally in the USD, curbing demand for risk assets and commodities priced in dollars. The US Dollar Index (DXY) hit a new three-month high of 99.94 on Monday, extending its winning streak to a fourth consecutive day.
Investors now turn their attention to Tuesday’s American Petroleum Institute (API) weekly inventory report, which will offer fresh insights into US Crude Oil stock trends.
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
Ghiles Guezout
FXStreet
Ghiles Guezout is a Market Analyst with a strong background in stock market investments, trading, and cryptocurrencies. He combines fundamental and technical analysis skills to identify market opportunities.
