- The WTI price is increasing, even if the concerns of the global offer go up after OPEC + to speed up production increases.
- OPEC + has promised an additional increase of 411,000 barrels per day (BPD) for June.
- Oil prices remain vulnerable due to the concerns of recession and slow demand for refined fuel imports.
West Texas Intermediate (WTI) crude oil Price continues to recover during Asian exchanges on Tuesday, $ 57.60 a barrel oscillating after a drop of almost 2% on Monday. However, the gains were capped by concerns concerning the increase in the global supply following an OPEC + decision to accelerate production increases.
Last week, OPEC +, the organization of oil exporting countries and its allies agreed to go up production for a second consecutive month, announcing an additional increase of 411,000 barrels per day (BPD) for June. This increase, brought by eight members, including Russia, leads to the combined increase for April, May and June to 960,000 b / d, effectively reversing 44% of 2.2 million b / d in the cuts implemented since 2022, according to reuters estimates.
Sources within the group have told Reuters that OPEC + could completely reverse its voluntary cuts by the end of October if compliance with the exit quotas does not improve. Saudi Arabia would have put pressure on the group to accelerate the decline in the cuts to penalize Iraq and Kazakhstan for their repeated failure to achieve the agreed production objectives.
David Wech, chief economist of the vortexa energy analysis company, told Reuters that recession fears and the sweet demand for refined fuel imports also lead to oil prices. Wech noted that since mid-February, global crude stocks have increased by around 150 million barrels, stored both in land and on the sea tanks at sea.
WTI oil faq
WTI oil is a type of crude oil sold on international markets. WTI means West Texas Intermediate, one of the three main types, including Brent and Dubai Brude. WTI is also called “light” and “sweet” because of its gravity and relatively low sulfur respectively. It is considered a high quality oil which is easily refined. It comes in the United States and distributed via Cushing Hub, which is considered “the crossroads of the world pipeline”. This is a reference for the oil market and the WTI price is frequently quoted in the media.
Like all assets, supply and demand are the main drivers of the WTI oil price. As such, global growth can be an engine of increased demand and vice versa for low global growth. Political instability, wars and sanctions can disrupt the offer and have an impact on prices. OPEC's decisions, a group of major oil producing countries, is another key engine in Price. The value of the US dollar influences the price of crude oil WTI because oil is mainly exchanged in US dollars, so a lower US dollar can make oil more affordable and vice versa.
Weekly petroleum stocks published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) have an impact on WTI oil prices. Changes in stocks reflect fluctuating supply and demand. If the data shows a drop in stocks, this may indicate increased demand, increasing the price of oil. Higher stocks can reflect the increased offer, lowering prices. The API report is published every Tuesday and EIA the next day. Their results are generally similar, falling to 1% from each other 75% of the time. EIA data is considered more reliable, as it is a government agency.
OPEC (Organization of Oil Exporting countries) is a group of 12 oil producing countries which collectively decide production quotas for member countries during meetings twice a year. Their decisions often have an impact on WTI oil prices. When OPEC decides to reduce quotas, it can tighten the offer, increasing oil prices. When the OPEC increases production, it has the opposite effect. OPEC + refers to an enlarged group which includes ten additional non -OPEC members, the most notable is Russia.
