WTI oil prices have been trading in negative territory for the fifth consecutive day during the early Asian session on Wednesday. The decline in prices is attributed to the fading worries of a wider conflict in the Middle East, although rising bets on a Federal Reserve rate cut in September may limit losses. Crude inventories reported a decline of 4.65 million barrels to 426.03 million last week according to the Energy Information Administration (EIA).
On Thursday, WTI oil is trading around $71.70, with prices edging lower due to reduced fears of a wider Middle East war. However, expectations of a Fed rate cut in September following the release of the FOMC Minutes are likely to cap further downside. Iran’s decision not to attack Israel in response to the killing of a senior Hamas leader in Tehran has contributed to the decline in oil prices. Analysts suggest that concerns over Chinese demand and progress in the Middle East ceasefire talks have also impacted oil prices.
The U.S. reported a decline in oil inventories to a seven-month low last week, further impacting WTI oil prices. The EIA reported a decrease of 4.65 million barrels to 426.03 million, compared to the previous week’s increase of 1.36 million barrels. Market consensus expected a decrease of 2.8 million barrels. The Fed minutes from the July 30-31 meeting indicated a likely policy easing at the next meeting if data continued to meet expectations. Oil traders are looking towards the preliminary US S&P Global Purchasing Managers Index (PMI) for August and Fed Chair Jerome Powell’s speech at Jackson Hole for further insight on interest rate plans.
WTI Oil, also known as West Texas Intermediate, is a type of crude oil sold on international markets and is considered a high-quality oil due to its low gravity and sulfur content. It is sourced in the United States and distributed via the Cushing hub, serving as a benchmark for the oil market. Supply and demand, global growth, political instability, and OPEC decisions are key drivers of WTI oil prices. The weekly oil inventory reports from the API and EIA also impact price fluctuations, with changes in inventories reflecting supply and demand dynamics. OPEC’s decisions on production quotas also influence WTI oil prices.
OPEC, the organization of the Petroleum Exporting Countries, is a group of 13 oil-producing nations that collectively decide on production quotas for member countries. OPEC’s decisions can impact WTI oil prices, with lower quotas tightening supply and pushing up prices. OPEC+ includes ten non-OPEC members, notably Russia, and their decisions also play a significant role in influencing oil prices. The value of the U.S. Dollar also influences the price of WTI crude oil, as oil is predominantly traded in U.S. Dollars, making it more affordable with a weaker dollar and vice versa.
