WTI remains capped below $68.50 on disappointing Chinese data, surprise climb in crude inventories
- WTI trades with mild gains near $68.20 in Wednesday’s early Asian session.
- Discouraging Chinese economic data and a surprise climb in crude inventories drag the WTI lower.
- US crude stockpiles rose 499K barrels last week, noted API.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $68.20 on Wednesday. The WTI price remains on the defensive amid a surprise climb in crude inventories and weak demand outlooks, particularly in China. However, the escalating geopolitical tensions in the Middle East might cap the downside for the WTI price.
WTI prices edges lower after disappointing China's international trade data on Tuesday. China's exports rose 6.7% YoY in November, while Imports fell by 3.9% YoY during the same period. Both the readings came below the market consensus. Additionally, China also reported a weaker-than-expected consumer price index (CPI) on Monday, underlining the ongoing sluggish domestic demands. This, in turn, could undermine the WTI price as China is the world's biggest oil importer, China's demand outlook has a direct influence on the crude markets
An increase in US crude inventories last week might weigh on the black gold price. The US American Petroleum Institute (API) weekly report showed Crude oil stockpiles in the United States for the week ending December 6 rose by 499,000 barrels, compared to a rise of 1.232 million barrels in the previous week. The market consensus estimated that stocks would decrease by 1.3 million barrels.
On the other hand, turbulence in the Middle East increased over the weekend as Syrian President Bashar al-Assad and his family fled to Moscow and were granted political asylum, ending 50 years of a brutal dictatorship. The ongoing geopolitical tensions in tthe Middle East could help limit the WTI’s losses.
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.