- WTI rebounds from a multi-day low hit on Monday, although it lacks follow-through buying.
- Modest USD strength acts as a headwind for the commodity amid China’s economic woes.
- Concerns about supply disruption from the Middle East should help limit any significant decline.
US West Texas Intermediate (WTI) crude oil prices are attracting some buying in the vicinity of the mid-$80.00s, or a multi-day low touched during Monday’s Asian session, although they lack bullish conviction. The commodity is currently trading around the $81.30 area, up less than 0.20% on the day and remains confined to a familiar range held for the past two weeks or so.
Concerns over supply disruptions stemming from ongoing conflicts in the Middle East are proving to be another factor lending some support to crude oil prices. That said, the emergence of some US Dollar (USD) buying, driven by safe-haven demand following an assassination attempt on former US President Donald Trump, should limit any significant appreciative move for the black liquid. Apart from this, China’s economic woes warrant some caution for bullish traders.
Market concerns about declining fuel demand in China, the world’s largest oil importer, resurfaced after official data showed the economy expanded 4.7% during the second quarter of 2024. Added to this was China’s retail sales and fixed-asset investment, which missed consensus estimates. This further pointed to heightened economic uncertainty and overshadowed the slightly better-than-expected release of June industrial production figures.
Meanwhile, softer US consumer inflation figures released last week reaffirmed market bets that the Federal Reserve (Fed) will start cutting interest rates in September. This could restrain USD bulls from opening aggressive bets and continue to act as a tailwind for crude oil prices. Therefore, it will be prudent to wait for strong follow-through buying before positioning for the resumption of the recent strong upside move seen over the past week or so.
WTI Oil FAQs
WTI crude oil is a type of crude oil sold on international markets. WTI stands for West Texas Intermediate, one of three main types that include Brent and Dubai crude. WTI is also known as “light” and “sweet” for 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 through the Cushing hub, considered “the pipeline crossroads of the world.” It is a benchmark for the oil market and the price of WTI is frequently quoted in the media.
Like all assets, supply and demand are the main factors determining the price of WTI crude oil. As such, global growth can be a driver of increased demand and vice versa in the case of weak global growth. Political instability, wars and sanctions can disrupt supply and impact prices. Decisions by OPEC, a group of large oil producing countries, are another key driver of price. The value of the US Dollar influences the price of WTI crude oil, as oil is primarily traded in US Dollars, so a weaker 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) influence the price of WTI oil. Changes in inventories reflect fluctuations in supply and demand. If the data show a decrease in inventories, it may indicate an increase in demand, which would push up the price of oil. An increase in inventories may reflect an increase in supply, which pushes down prices. The API report is published every Tuesday, and the EIA report the following day. Their results are usually similar, with a difference of 1% between them 75% of the time. The EIA data is considered more reliable because it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 13 oil-producing nations that collectively decide on member countries’ production quotas at biennial meetings. Their decisions often influence WTI oil prices. When OPEC decides to reduce quotas, it can restrict supply and drive up oil prices. When OPEC increases production, the opposite effect occurs. OPEC+ is an expanded group that includes ten other non-OPEC countries, most notably Russia.
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.
