- WTI prices continue to rise as governments around the world are expected to increase policy support to revive economic growth.
- China’s state planner, the NDRC, outlined plans to significantly increase financing through ultra-long treasury bonds to support the “two new” programs.
- EIA crude oil stocks decreased by 1.178 million barrels, marking the sixth consecutive decline in crude oil stocks.
The West Texas Intermediate (WTI) oil price continues its winning streak for the sixth consecutive day, trading around $73.00 per barrel during the Asian session on Friday. The price of WTI hit a two-and-a-half-month high of $73.39 on Thursday. Crude oil prices were boosted by optimism that governments around the world would increase political support to revive economic growth, which could boost fuel demand.
However, factory activity in Asia, Europe and the US ended 2024 on a weak note, as expectations for the new year faded due to rising trade risks associated with Donald Trump’s incoming presidency and the fragile recovery. economic of China.
The National Development and Reform Commission (NDRC), China’s state planner, expressed confidence in achieving continued economic recovery in 2025. In a statement on Friday, it highlighted plans to significantly increase financing from ultra-long treasury bonds to support the “two new” programs, with expectations of constant growth in consumption throughout the year.
Additionally, a Financial Times report noted that the People’s Bank of China (PBoC) anticipates an interest rate cut this year at the right time. Traders are closely monitoring the possible recovery of China’s economy and its effect on oil demand. In a New Year’s speech on Tuesday, President Xi Jinping reaffirmed his commitment to prioritizing economic growth in the world’s largest oil-importing nation, promising more proactive policies to boost China’s economy in 2025.
Analysts at Capital Economics said in a note, referencing purchasing managers’ index data released Thursday, “December PMIs for Asia were a mixed bag, but we continue to expect manufacturing activity and GDP growth in the region remain moderate in the short term.”
Meanwhile, the Energy Information Administration (EIA) reported a decline in crude oil inventories for the week ending December 27. The EIA crude oil stock change reported a decline of 1.178 million barrels, a smaller decline than the market expectation of a drop of 2.75 million barrels. This marked the sixth consecutive drop in crude oil stocks. Additionally, crude oil inventories at the Cushing, Oklahoma delivery hub decreased by 0.142 million barrels.
WTI Oil FAQs
WTI oil is a type of crude oil that is sold in international markets. WTI stands for West Texas Intermediate, one of the 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 facility, considered “the pipeline junction 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 that determine the price of WTI 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 alter supply and impact prices. The decisions of OPEC, 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, as oil is primarily traded in US dollars, so a weaker Dollar can make oil more affordable and vice versa.
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 the fluctuation of supply and demand. If the data shows a decline in inventories, it may indicate an increase in demand, which would drive up the price of oil. An increase in inventories can reflect an increase in supply, which drives down prices. The API report is published every Tuesday and the EIA report the next day. Their results are usually similar, with a difference of 1% between them 75% of the time. EIA data is considered more reliable since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 13 oil-producing nations that collectively decide member countries’ production quotas at biannual 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 member countries, including 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.
