- The WTI price falls as progress in nuclear conversations between the US and Iran increases the possibility that Iranian crude returns to the market.
- The potential that OPEC+ increases production per second consecutive month is exerting additional pressure on oil prices.
- The feeling of oil could also be affected by signs of a deceleration in China’s demand.
The price of oil West Texas Intermediate (WTI) is quoted down around $ 62.70 per barrel during the European hours on Monday. The prices of crude oil continue to fall as progress in nuclear conversations between the USA and Iran increases the perspective that the Iranian crude returns to the market. In addition, the expectations that the organization of oil exporting countries and its allies, OPEC+, could increase production for the second consecutive month have put additional pressure on oil prices.
However, WTI prices could see some recovery, driven by the hope of a relaxation of commercial tensions between the US and China. On Friday, China announced an exemption for certain US imports of its high rates of 125%, which generated optimism that the prolonged commercial dispute between the two largest economies could be close to a resolution.
In addition, the US Secretary of Agriculture, Brooke Rollins, mentioned Sunday that the Trump administration is in daily discussions with China on rates. Rollins also pointed out that negotiations with other commercial partners are moving forward, with several trade agreements “very close” to be completed. In contrast, US Treasury Secretary Scott Besent did not support Trump’s statement about the ongoing conversations with China, while Beijing denied that discussions were being carried out.
Despite these developments, the feeling could be affected by signs of a deceleration in China’s demand. Reports suggest that some Chinese manufacturers are suspending production and looking for alternative markets due to US rates, which is leading to less orders and affecting employment. Although it is not yet generalized, these interruptions could ultimately harm the demand for oil, since China remains the largest importer of oil.
WTI FAQS oil
WTI oil is a type of crude oil that is sold in international markets. WTI are the acronym of West Texas Intermediate, one of the three main types that include the Brent and Dubai’s crude. The WTI is also known as “light” and “sweet” by its relatively low gravity and sulfur content, respectively. It is considered high quality oil that is easily refined. It is obtained in the United States and is distributed through the Cushing Center, considered “the crossing of the world.” It is a reference for the oil market and the price of WTI is frequently traded in the media.
Like all assets, supply and demand are the main factors that determine the price of WTI oil. As such, global growth can be a driver of the increase in demand and vice versa in the case of weak global growth. Political instability, wars and sanctions can alter the offer and have an impact on prices. OPEC decisions, a group of large oil -producing countries, is another key price factor. The value of the US dollar influences the price of WTI crude oil, since oil is mainly traded in US dollars, so a weaker dollar can make oil more affordable and vice versa.
Weekly reports on oil inventories published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) influence the price of WTI oil. Changes in inventories reflect the fluctuation of supply and demand. If the data show a decrease in inventories, it can indicate an increase in demand, which would raise the price of oil. An increase in inventories may reflect an increase in supply, which makes prices lower. The API report is published every Tuesday and that of the EIA the next day. Their results are usually similar, with a 1% difference between them 75% of the time. EIA data is considered more reliable, since it is a government agency.
The OPEC (Organization of Petroleum Exporting Countries) is a group of 13 nations oil producing that collectively decide the production quotas of member countries in biannual meetings. Their decisions usually influence WTI oil prices. When OPEC decides to reduce fees, it can restrict the supply and raise oil prices. When OPEC increases production, the opposite effect occurs. The OPEC+ is an expanded group that includes another ten non -members of the OPEC, among which Russia stands out.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
