- WTI edges lower, though it remains confined within a one-week-old trading range.
- Easing supply concerns and a modest USD uptick cap the upside for the commodity.
- Bears, however, seem reluctant ahead of the US NFP report and the OPEC+ meeting.
West Texas Intermediate (WTI) US Crude Oil prices remain confined in a familiar range held over the past week or so and trade just above mid-$64.00s, down less than 0.50% for the day heading into the European session on Wednesday. Moreover, a mixed fundamental backdrop warrants some caution before positioning for a firm near-term direction.
The ceasefire between Iran and Israel eased concerns of supply disruptions in the Middle East. Adding to this, planned supply increases by the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, turn out to be a key factor acting as a headwind for Crude Oil prices. Apart from this, a modest US Dollar (USD) recovery from its lowest level since February 2022 seems to undermine the commodity.
However, the growing acceptance that the Federal Reserve (Fed) would resume its rate-cutting cycle in the near future should keep a lid on any meaningful appreciation for the buck. This, in turn, should support USD-denominated commodities and limit losses for Crude Oil prices. Traders might also opt to wait for the release of the closely-watched US Nonfarm Payrolls (NFP) report on Thursday before placing fresh directional bets.
Apart from this, the market focus will be on the OPEC+ meeting on July 6, where the cartel is expected to hike August output by 411,000 bpd. In the meantime, Wednesday’s release of the US ADP report will play a key role in influencing the USD price dynamics. Moreover, the official US oil stockpile data from the Energy Information Administration (EIA) would provide some impetus to the black liquid later during the North American session.
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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