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WTI trades with mild positive bias around $69.70-$69.75 area, lacks bullish conviction

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WTI trades with mild positive bias around $69.70-$69.75 area, lacks bullish conviction

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New update 2024.12.23 12:46
WTI trades with mild positive bias around $69.70-$69.75 area, lacks bullish conviction

update 2024.12.23 12:46

  • WTI attracts some buyers for the second straight day, though it lacks follow-through.
  • Easing worries about a slowdown in demand from China lends support to the commodity.
  • The prospects for rising supply from non-OPEC+ nations might cap gains for Oil prices. 

West Texas Intermediate (WTI) US Crude Oil prices edge higher for the second straight day on Monday and move away from over a one-week low, around the $68.40-$68.35 region touched on Friday. The commodity, however, lacks bullish conviction and trades around the $69.75-$69.80 area during the Asian session, up less than 0.50% for the day.

A weekend editorial from a media outlet affiliated with China's Ministry of Housing and Urban-Rural Development hinted at further measures to support the recovery of the property market. This helps ease worries about a slowdown in demand, which, along with concerns about supply disruptions stemming from tighter sanctions on Russia and Iran, acts as a tailwind for Crude Oil prices. 

Meanwhile, the US Dollar (USD) remains below a two-week high touched on Friday in the wake of the Personal Consumption Expenditure (PCE) Price Index report for November, which pointed to signs of inflation moderation. A softer buck tends to benefit USD-denominated commodities and turns out to be another factor supporting Crude Oil prices, though any meaningful gains seem elusive. 

The Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, recently decided to postpone planned supply increases by three months until April and extend the full unwinding of cuts by a year until the end of 2026. Furthermore, the International Energy Agency highlighted increasing supply from non-OPEC+ nations, which, in turn, might cap Crude Oil prices. 

Hence, it will be prudent to wait for strong follow-through buying before positioning for any further intraday appreciating move. Trades now look forward to the release of the Conference Board's Consumer Confidence Index, which might influence the USD price dynamics and provide some impetus to Crude Oil prices.

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.

 

Date

Created

 : 2024.12.23

Update

Last updated

 : 2024.12.23

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