- WTI recovers to near $75.10 in Friday’s early Asian session.
- The upbeat US Initial Jobless Claims data and falling crude inventories support the WTI price.
- Chinese demand concerns might cap the upside in the near term.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $75.10 on Friday. WTI price edges higher on the back of falling crude inventories and positive US labor data.
US crude inventories fell for a sixth straight week, reflecting positive demand. According to the US. Energy Information Administration’s (EIA) weekly report, crude oil stockpiles in the United States for the week ending August 2 dropped by 3.728 million barrels, compared to a fall of 3.436 million barrels in the previous week. The market consensus estimated that stocks would decline by 0.4 million barrels.
Furthermore, the US Initial Jobless Claims data released on Thursday has eased some fears about the weakness in the US labor market. The US Initial Jobless Claims for the week ending August 3 rose by 233K, compared to the previous week of 250K (revised from 249K), below the consensus of 240K.
On the other hand, eased fears of geopolitical tensions in the Middle East might cap the upside for the WTI price. Ryan Grabinski, an analyst at Strategas, noted on Wednesday that “Regardless of the ongoing conflicts in the Middle East, particularly with Iran and Israel, there has been no meaningful disruption to the flow of crude oil in the region.”
Meanwhile, the sluggish demand in China might drag the price of black gold lower as China is the world’s biggest oil importer. Official data showed that Chinese crude imports dropped to 10.01 million barrels per day in July. Analysts forecast a year-on-year import drop in 2024, with expectations that crude imports could fall by 150,000 to 200,000 barrels per day.
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 13 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.