- WTI Oil price appreciates as the American Petroleum Institute (API) reports a decline in US Oil stockpiles.
- API Crude Oil stock fell by 4.4 million barrels for the previous week, against the expected decrease of 33K barrels.
- Oil prices struggled after the hawkish remarks from Fed member Dr. Adriana Kugler on Tuesday.
West Texas Intermediate (WTI) Oil price recovers its intraday losses, trading around $80.00 per barrel during the European hours on Wednesday. The decline in the US Dollar (USD) contributes support for the crude Oil demand, underpinning the Oil prices.
Additionally, the Oil price receives support due to the declining Oil stockpiles in the United States (US), the world's largest Oil producer and consumer. The American Petroleum Institute (API) reported a decline of 4.4 million barrels in weekly crude Oil stock for the week ending July 12. Analysts surveyed by Reuters had estimated a smaller decrease of 33,000 barrels. The US Energy Information Administration (EIA) will release its official storage report later in the North American session.
However, prices of liquid gold faced challenges due to a slowing Chinese economy, which is reducing demand in the world's largest Oil-importing country. China's Gross Domestic Product (GDP) grew 4.7% year-over-year in the second quarter, compared to a 5.3% expansion in the first quarter and an expected 5.1%. This is the slowest growth since the first quarter of 2023.
Standard Chartered expects cuts from the People's Bank of China (PBoC) in rates and the reserve requirement ratio (RRR) as GDP growth decelerates in Q2. China’s growth drivers remain uneven, and trade tensions are rising, with the US and EU imposing new tariffs on Chinese electric vehicles (EVs).
Additionally, Oil prices struggled due to the emergence of the hawkish sentiment surrounding the Federal Reserve (Fed) policy stance after the speech from Federal Reserve (Fed) Board of Governors member Dr. Adriana Kugler on Tuesday. Dr. Kugler indicated that if upcoming data does not confirm that inflation is moving toward the 2% target, it may be appropriate to maintain current rates for a while longer.
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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