WTI remains solid around $67.50 due to China’s stimulus measures, Middle-East tensions
- WTI climbs as China unveils new measures to stimulate consumption.
- Houthis take responsibility for attacking the USS Harry S. Truman aircraft carrier.
- Oil prices gain support amid waning optimism for a quick resolution to the Ukraine war.
West Texas Intermediate (WTI) Oil price extends its winning streak for a second consecutive session, trading around $67.40 per barrel during Asian market hours on Monday. The gains come as crude prices strengthen following China’s, the world's largest oil importer, announcement of new measures to boost consumption.
On Sunday, Beijing announced a special initiative aimed at reviving domestic consumption. The plan includes wage increases, incentives to boost household spending, and efforts to stabilize stock and real estate markets.
Oil prices also received support from escalating geopolitical tensions in the Middle East, which have raised concerns over supply disruptions. On Sunday, the Houthis claimed responsibility for an attack involving 18 ballistic and cruise missiles, as well as drones, targeting the USS Harry S. Truman aircraft carrier and its escorting warships in the northern Red Sea.
Meanwhile, US Defense Secretary Lloyd Austin reaffirmed that the United States (US) would continue targeting Yemen’s Houthis until they cease their attacks on shipping. The Iran-backed group, in turn, has vowed to escalate its retaliation in response to recent US strikes.
Additionally, crude Oil prices found support from fading hopes for a swift resolution to the war in Ukraine, which could have led to increased Russian energy supplies to Western markets. However, discussions on a potential ceasefire may take place this week, as US President Donald Trump and Russian President Vladimir Putin are expected to engage in talks.
Steve Witkoff, Trump’s envoy, stated on Sunday that he anticipates the two leaders will speak, adding that Putin “accepts the philosophy” of Trump’s ceasefire proposal, according to *The Guardian*. Last week, the US and Ukraine proposed a 30-day ceasefire to Russia, with Putin reportedly showing support for the initiative.
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.