- WTI price declines to near $65.65 in Tuesday’s early Asian session.
- OPEC+ agreed to hike output by 547,000 barrels per day for September.
- Traders await the API weekly crude oil stock report later on Tuesday for fresh impetus.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $65.65 during the early Asian trading hours on Tuesday. The WTI trades with mild losses after the Organization of Petroleum Exporting Countries and allies (OPEC+) approved another significant production increase in September.
OPEC+ met virtually on Sunday, agreeing to boost oil production by 547K barrels per day (bps) for September as concerns mount over potential supply disruptions linked to Russia. The group began increasing output in April with a modest hike of 138K bpd, followed by larger-than-expected rises of 411K bpd in May, June, and July, 548K bpd in August, and now 547K bpd for September.
The threat of secondary sanctions on Russian crude might help limit the WTI’s losses. US Special Envoy Steve Witkoff is expected to visit Russia on Wednesday. Oil traders will closely monitor the development surrounding the agreement between Washington and Moscow. However, the impact of any potential measures remains uncertain.
“The oil market is still assigning a low probability to anything meaningful from the White House as it relates to Russian oil exports,” said Pavel Molchanov, an analyst at Raymond James.
Oil traders brace for the release of the American Petroleum Institute (API) weekly crude oil stock report, which is due later on Tuesday. On Wednesday, the Energy Information Administration (EIA) Crude Oil stockpiles report will be released.
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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