On Thursday, West Texas Intermediate (WTI) crude oil prices rose during the early European trading session, reaching $73.52 per barrel, an increase from Wednesday’s closing price of $72.94. Similarly, Brent crude prices advanced to $75.51, up from $75.08 the previous day.
WTI, a key type of crude oil traded internationally, is known for its lighter and sweeter characteristics due to lower gravity and sulfur content compared to other oil varieties. It is recognized as a high-quality oil that is easy to refine. Sourced primarily from the United States and distributed through the Cushing hub, WTI serves as a crucial benchmark in the oil market, frequently referenced in financial media.
The price of WTI oil is primarily driven by the interplay of supply and demand. Factors such as global economic growth can boost demand for oil, while sluggish growth may diminish it. Additionally, geopolitical tensions, conflicts, and trade sanctions can disrupt supply chains, thereby impacting prices. Decisions made by OPEC, the organization of major oil-exporting countries, play a significant role in shaping market prices as well. The value of the U.S. dollar is another important factor; since oil transactions are typically conducted in dollars, fluctuations in the dollar’s strength can influence oil affordability.
The weekly inventory reports released by the American Petroleum Institute (API) and the Energy Information Agency (EIA) also affect WTI prices. These reports provide insights into supply and demand dynamics, with decreasing inventory figures often signaling increased demand — and consequently higher prices — while rising inventories may suggest oversupply, leading to lower prices. The API publishes its report on Tuesdays, followed by the EIA report the next day. The latter is generally viewed as more authoritative, being released by a government entity.
OPEC, comprising 12 oil-producing nations, meets biannually to set production quotas for its members, impacting global oil prices significantly. A decision to lower production quotas usually tightens supply and raises prices, while an increase in production can have the opposite effect. The OPEC+ coalition, which includes ten non-OPEC countries with Russia being the most prominent, further complicates the market dynamics at play.
