- WTI edges lower on Friday and erodes a part of the previous day’s positive move.
- China’s economic woes and an unexpected build in US inventories exert pressure.
- Middle East tensions and hopes of improving demand should limit deeper losses.
West Texas Intermediate (WTI) US crude Oil prices struggle to capitalize on the overnight bounce from the vicinity of the weekly low and trade with a mild negative bias during the Asian session on Friday. The commodity currently hovers around the $76.70 area, down 0.25% for the day, though it remains on track to register modest gains for the second straight week.
The risk of supply disruption remains elevated in the wake of escalating tensions in the Middle East. Furthermore, the upbeat US macro data released on Thursday eased fears about a downturn in the world's largest economy. This, along with hopes that rate cuts by the Federal Reserve (Fed) will boost economic activity and push up fuel consumption, might continue to lend some support to Crude Oil prices.
Meanwhile, the US Dollar (USD) struggles to capitalize on the previous day's post-data positive move amid bets that the Fed that the Fed will eventually begin its rate-cutting cycle in September. Furthermore, the prevalent risk-on mood is seen as another factor undermining the safe-haven Greenback, which tends to boost demand for USD-denominated commodities, including Crude Oil prices.
Investors, however, remain worried about an economic slowdown in China – the world's biggest oil importer. Adding to this, the OPEC and the IEA downgraded their forecasts for Oil demand growth in 2024. This, along with an unexpected build in US inventories, suggesting that demand was cooling, acts as a headwind for Crude Oil prices and exerts some downward pressure on the last day of the week.
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 climbs to new 2024-high above 1.1100
![EUR/USD climbs to new 2024-high above 1.1100](https://editorial.fxstreet.com/images/Markets/Currencies/Majors/EURUSD/world-currencies-53600634_XtraSmall.jpg)
EUR/USD stretches higher in the second half of the day on Tuesday and trades above 1.1100 for the first time in 2024. The US Dollar stays under persistent selling pressure and allows the pair to push higher despite the mixed action seen in Wall Street.
GBP/USD holds above 1.3000, closes in on yearly peak
![GBP/USD holds above 1.3000, closes in on yearly peak](https://editorial.fxstreet.com/images/Markets/Currencies/Majors/GBPUSD/iStock-1178148633_XtraSmall.jpg)
GBP/USD preserves its bullish momentum and closes in on the annual-high it set at 1.3045 in July. The broad-based US Dollar (USD) weakness fuels the pair's rally as investors await comments from Federal Reserve officials.
Gold retreats from record highs, holds above $2,500
![Gold retreats from record highs, holds above $2,500](https://editorial.fxstreet.com/images/Markets/Currencies/Crosses/XAUUSD/gold-ingot-20089693_XtraSmall.jpg)
Gold extends its uptrend and trades at a fresh record high above $2,520 on Tuesday. The benchmark 10-year US Treasury bond yield stays in negative territory below 3.9%, allowing XAU/USD to continue to stretch higher.
Tether to launch USDT on Aptos blockchain
![Tether to launch USDT on Aptos blockchain](https://editorial.fxstreet.com/images/Markets/Currencies/Cryptocurrencies/Aptos/Aptos-logo_XtraSmall.png)
Aptos announced on Tuesday that Tether is launching its USDT stablecoin on the Aptos blockchain. This move is positive for Aptos as stablecoins such as USDT act as a bridge between the crypto assets and fiat currencies.
Canadian headline CPI matched estimates in July
![Canadian headline CPI matched estimates in July](https://editorial.fxstreet.com/images/Breaking/breaking-news_XtraSmall.jpg)
According to a report from Statistics Canada on Tuesday, annual inflation in Canada, as indicated by the Consumer Price Index (CPI), held steady at 2.5% in July, falling short of market expectations.