WTI remains under pressure below $71.50 as Saudi Arabia commits to increase oil production. – Crypto News – Crypto News
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WTI remains under pressure below $71.50 as Saudi Arabia commits to increase oil production. – Crypto News

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  • WTI trades in negative territory for the third consecutive day near $67.00 in Friday’s Asian session. 
  • The prospect of more oil output drags the WTI price lower. 
  • The Chinese fresh stimulus plans help limit the WTI’s losses. 

West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $71.30 on Friday. WTI price edges lower as Saudi Arabia is committed to pressing ahead with output increases later this year.

Saudi Arabia is ready to abandon its unofficial price target of $100 a barrel for crude oil as it prepares to increase production, even if the move results in a prolonged period of low oil prices, per the Financial Times. 

Furthermore, the expectation that oil production in Libya will rise after rival political factions agreed to appoint a new central bank governor on Thursday exerts some selling pressure on the WTI price. “The prospect of additional supply from Libya and Saudi Arabia has been the main driver behind the latest weakness,” said Ole Hansen, an analyst at Saxo Bank.

On the other hand, the downside of the black gold might be limited as Chinese officials announced a fresh stimulus package earlier this week. The prospect of higher Chinese demand due to the recent measures could lift the WTI price as China is the world’s largest crude importer and second-largest consumer. 

On Friday, the People’s Bank of China (PBOC) cut the seven-day repo rate to 1.5% from 1.7% on Friday. Additionally, the Chinese central bank announced to cut the amount of the reserve requirement ratio (RRR), the required minimum capital banks must hold in reserve, by 50 basis points (bps).

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.

 

 

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