- WTI prices remain subdued near 68.37, the lowest level since December 2023, which was recorded on Thursday.
- Crude Oil prices lost ground due to demand fears in the United States and China.
- EIA Crude Oil Stocks Change fell by 6.873 million barrels, against the expected decline of 0.9 million barrels.
West Texas Intermediate (WTI) Oil price trades around $68.60 during the Asian hours on Friday, hovering around 68.37 lowest since December 2023, which was recorded on Thursday. Crude Oil prices depreciate due to concerns over demand in both the United States (US) and China.
The US ISM Manufacturing PMI indicated that factory activity contracted for the fifth consecutive month, with the pace of decline slightly exceeding expectations. Additionally, the world's biggest crude importer China showed that manufacturing activity fell to a six-month low in August, with factory gate prices dropping significantly.
On Thursday, the US Energy Information Administration (EIA) reported a Crude Oil Stocks Change, which reduced by 6.873 million barrels of crude Oil inventory for the week ending August 30. This was significantly larger than the market's expectation of a 0.9 million-barrel decrease, following the prior reduction of 0.846 million barrels.
The downside of the Oil prices would be restrained due to ongoing discussions between the Organization of the Petroleum Exporting Countries and its allies led by Russia (OPEC+), regarding a delay in planned output increases set to begin in October. According to Reuters, OPEC+ decided to postpone the scheduled Oil output increase for October and November and indicated that further delays or reversals of the hikes could be considered if necessary.
WTI prices may find support from the dovish comments made by Federal Reserve (Fed) officials, which enhance the chances of an aggressive rate cut by the Fed in September. Lower borrowing costs could stimulate economic activity in the United States, potentially boosting Oil demand.
Chicago Fed President Austan Goolsbee said on Friday that the longer-run trend of the labor market and inflation data justify the Fed easing interest-rate policy soon and then steadily over the next year. FXStreet’s FedTracker, which gauges the tone of Fed officials’ speeches on a dovish-to-hawkish scale from 0 to 10 using a custom AI model, rated Goolsbee’s words as neutral with a score of 3.8.
According to the CME FedWatch Tool, markets are fully anticipating at least a 25 basis point (bps) rate cut by the Federal Reserve at its September meeting. The likelihood of a 50 bps rate cut has risen to 41.0%, up from 30.0% a week ago.
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.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD holds above 1.1100 ahead of US jobs report
EUR/USD stays in a consolidation phase above 1.1100 after posting strong gains for two consecutive gains. Investors await the August jobs report from the US, which will include Nonfarm Payrolls and wage inflation figures.
GBP/USD consolidates near 1.3200 as focus shifts to NFP
GBP/USD trades in a narrow range slightly below 1.3200 in the European session on Friday. Market participants refrain from taking large positions as focus shifts to August Nonfarm Payrolls data from the US, which could influence the Fed's rate outlook.
Gold price bulls turn cautious near $2,525 hurdle ahead of US NFP report
Gold price (XAU/USD) climbed closer to the $2,524-2,525 supply zone on Thursday amid some follow-through US Dollar (USD) selling, led by bets for a larger interest rate cut by the Federal Reserve (Fed) later this month.
Nonfarm Payrolls expected to show modest hiring rebound in August after July’s tepid report
The Nonfarm Payrolls report is forecast to show that the US economy added 160,000 jobs in August, after creating 114,000 in July. The Unemployment Rate is likely to dip to 4.2% in the same period from July’s 4.3% reading.
Why Ethereum is underperforming Bitcoin, Solana, Nvidia, Meta, Apple and others
Ethereum (ETH) is down 2% on Thursday following a key analysis showing the top altcoin has underperformed assets, including Bitcoin, Solana, Nvidia, Meta, Apple, Gold and others. CryptoQuant analysts and the F2pool co-founder weigh in on why ETH has underperformed and what investors should expect.
Moneta Markets review 2024: All you need to know
VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.