- The price of WTI is reduced to around USD 62.00 in an early Asian session.
- Fears of the global surplus of oil undermine the price of WTI.
- According to EIA, oil reserves fell by 4.304 million barrels during the week ended on May 30.
- Increased geopolitical risk and expectations that Iran will reject an American nuclear agreement may limit the minus WTI.
West Texas Intermediate (WTI), an American oil reference point, trads around USD 62.00 at Asian commercial hours on Thursday. Prices WTI lower edges, when Saudi Arabia signals, it can press on a enormous boost in production, increasing the fears of the global surplus of oil.
On Saturday, the organization of oil exporting countries and its allies (OPEC+) decided to boost its production again on Saturday. OPEC+ planned to raise production with a fixed rate of 411,000 barrels a day (BPD) in July, after growing in May and June.
Bloomberg has announced that Saudi Arabia is open to additional raw production increases to boost its market share, which is seen as a strategy for reducing oil prices and punishment of supernatural members of OPEC+, such as Kazakhstan and Iraq. The fear of global oil supply weighs the price of WTI.
State gasoline supplies swelled by 5.2 million barrels, reported by the Energy Information Administration (EIA). The respondents expected an boost of 600,000 barrels. Meanwhile, oil reserves in the US have fallen more than expected last week. The EIA weekly report showed that the US oil in the US ended by 4.304 million barrels in the week, compared to a decrease in 2.795 million barrels last week. The market consensus estimated that the shares would fall by 900,000 barrels.
On the other hand, doubts about the nuclear agreement between the United States and Iran may aid limit WTI losses. Iranian, the highest leader Ali Chamenei said that he did not think that talks with the USA would succeed, while US President Donald Trump said that Tehran would face “something bad” if he did not quickly accept the American proposal about the nuclear program.
FAQ of WTI oil
WTI oil is a type of crude oil sold on international markets. WTI means West Texas Intermediate, one of the three main types, including Brent and Dubai oil. WTI is also referred to as “light” and “sweet” due to its relatively low gravity and sulfur content. It is considered high quality oil that can be easily refined. He comes from the United States and distributed through Cushing Hub, which is considered “the intersection of the world pipelines”. This is a reference point for the oil market, and the price of WTI is often cited in the media.
Like all assets, supply and demand are the key factors for the price of WTI oil. As such, global growth can be the driving force of increased demand and vice versa for destitute global growth. Political instability, wars and sanctions can interfere with supply and affect prices. OPEC decisions, groups of the main oil -producing countries, are another key driving force. The value of the American dollar affects the price of WTI oil, because oil is mainly traded in American dollars, which is why a weaker American dollar can make oil more accessible and vice versa.
Weekly reports with oil reserves published by the American Petroleum Institute (API) and the Energy Information Agency (EEA) affect the price of WTI oil. Changes in wrestling reflect the variable supply and demand. If the data shows a decrease in stocks, it may indicate increased demand by raising the price of oil. Higher supplies can reflect the increased supply by lowering prices. The API report is published every Tuesday, and EIA the next day. Their results are usually similar, at a distance of 1% 75% of time. The OEP data is considered more reliable because it is a government agency.
OPEC (organization of oil exporting countries) is a group of 12 pus producing nations, which together determine production amounts for member states at meetings twice a year. Their decisions often affect WTI oil prices. When OPEC decides to reduce the amounts, it can tighten supply by raising oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an extended group, which includes ten additional members outside OPEC, of whom Russia is most noteworthy.
