WTI moves below $80.00 due to a surprise build in US crude stockpiles
|- WTI price loses ground as a surprise build on US crude stockpiles raised concerns about weakening demand.
- US EIA Crude Oil Stocks Change increased by 3.591 million barrels in the previous week, against an expected decline of 3.000 million barrels.
- US crude Oil imports reached 3.1 million barrels per day in May, the highest since July 2022.
West Texas Intermediate (WTI) crude Oil price edges lower to near $80.30 during the Asian session on Thursday, retreating further from a two-month high of $81.65. Crude Oil prices received pressure after a surprise build in US crude stockpiles raised concerns about weakening demand in the world’s top Oil consumer.
On Wednesday, US Energy Information Administration data showed that US Crude Oil Stocks Change increased by 3.591 million barrels in the week ending June 21, defying market expectations for a 3.000 million-barrel decline.
Ongoing geopolitical tensions in the Middle East and Ukraine could further fuel the prices of the Oil prices. Israeli Prime Minister Benjamin Netanyahu has stated that the most “intense” phase of the attack against Hamas in Gaza is nearing its end, according to CNN. Meanwhile, Russia has condemned the US for a "barbaric" strike in Crimea, which utilized US-provided missiles, resulting in the deaths of at least four people, including children, and injuring 151 others, per NBC News.
However, last month, US crude Oil imports surged to their highest level in nearly two years, driven by refiners acquiring heavy crudes from Canada and Latin America to produce fuels for the summer driving season. In May, US crude Oil imports reached 3.1 million barrels per day (bpd), the highest since July 2022, according to ship tracking service Kpler. So far this month, imports have remained robust, averaging around 2.9 million bpd, as reported by Reuters.
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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