- WTI price continues to gain ground following China’s NBS PMI release, indicating the manufacturing sector expanded in December.
- China's official Manufacturing PMI slipped to 50.1 in December, down from 50.3 in the previous reading.
- US crude stockpiles are forecasted to have dropped by approximately 3 million barrels last week.
West Texas Intermediate (WTI) Oil price extends its gains for the third successive day, trading around $71.40 per barrel during the Asian session on Tuesday. Crude Oil prices have maintained their gains following the release of the NBS Manufacturing Purchasing Managers' Index (PMI), which indicates that China's manufacturing sector expanded in December.
Factory output in China rose for the third consecutive month, though it slightly dipped to 50.1 in December, down from 50.3 in the previous report and below the market's expectation of 50.3. This data suggests that new stimulus measures are helping to support the economy of the world's largest crude Oil importer. Additionally, Chinese authorities have agreed to issue a record 3 trillion Yuan ($411 billion) in special treasury bonds in 2025 to boost economic growth, as reported by Reuters last week.
Oil prices could receive short-term support from a decline in US crude stockpiles, which are expected to have dropped by approximately 3 million barrels last week, per Reuters. However, a weak long-term demand outlook has put downward pressure on Oil prices. Traders are now awaiting US factory survey data for further insights into the demand outlook.
Meanwhile, Oil prices are poised for a modest annual decline of approximately 0.5%, after being stuck in a tight trading range for several months. As the market looks to the future, it anticipates a potentially turbulent year, driven by worries about an oversupply, geopolitical tensions, and the possible influence of the upcoming Trump administration on Oil policy, leading to a cautious sentiment.
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.
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