WTI steadies around $69.50 amid thin pre-holiday trading
- WTI price moves little as trading activity remains subdued before the Christmas holiday.
- Oil prices received some support after recent data indicated that the US economy remained strong heading into the year-end.
- The third-largest Oil importer India's crude Oil imports, increased by 2.6% YoY to 19.07 million metric tons in November.
West Texas Intermediate (WTI) Oil price continues to remain tepid for the second successive session, trading around $69.30 per barrel during the Asian hours on Tuesday. However, crude Oil prices found some support due to thin trading activity ahead of the Christmas holiday.
Additionally, Oil prices gained some support after US data showed that the economy of the United States (US), the largest Oil consumer, remained robust as the year-end approached. New orders for essential US-manufactured capital goods surged in November, driven by strong demand for machinery, while new home sales also rebounded, signaling that the US economy is on solid footing as the year ends.
Meanwhile, India's crude Oil imports, the third-largest in the world, increased by 2.6% year-on-year to 19.07 million metric tons in November, driven by strong demand amid rising economic and travel activity.
However, the prices of the black gold could find challenges due to concerns about potential oversupply during next year. European supply fears also eased after reports indicated that the Druzhba pipeline resumed operations following technical issues at a Russian pumping station.
The demand for dollar-denominated Oil faces challenges due to the stronger US Dollar (USD), which makes crude Oil more expensive for buyers holding foreign currencies. The Greenback receives support as traders are factoring in only two rate cuts in 2025 after Fed policymakers signaled fewer interest rate cuts next year due to a slowdown in the disinflation process.
In the Middle East, efforts by mediators Egypt, Qatar, and the US to end the fighting between Israel and Hamas have gained momentum this month, with Israeli and Palestinian officials noting that the gaps between the parties have narrowed. However, crucial differences remain unresolved, according to Reuters.
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.