- WTI trades under pressure ahead of the US NFP data for August, and the OPEC+ meeting.
- Economists expect the job growth to have remained steady.
- OPEC+ members are expected to hike Oil production further.
West Texas Intermediate (WTI), futures on NYMEX, trades with caution around $62.50 during the late European trading session on Friday. The Oil price faces selling pressure as United States (US) oil inventory data for the week ending July 29 came in surprisingly higher.
The US Energy Information Administration (EIA) reported on Thursday that Oil stockpiles rose by 2.415 million barrels, while the inventory was expected to decline by 1.80 million barrels.
Rising Oil inventory signifies a slowdown in the energy demand, which results in a decline in the Oil price. For fresh cues on the Oil demand in the US, investors await key Nonfarm Payrolls (NFP) data for August, which will be published at 12:30 GMT.
According to expectations, the US economy added 75K fresh workers, almost in line with the July’s reading of 73K. The Unemployment Rate is expected to have accelerated to 4.3% from the former release of 4.2%.
Signs of cooling job demand would weigh further on the Oil price. On the contrary, improving job market conditions will indicate an increase in the energy demand going forward.
On the supply front, investors await OPEC+ meeting about adjustment in output hike, which is scheduled for Sunday.
According to a report from Reuters, OPEC+ members were considering approving even more output hikes, following around 2.2 million barrels per day of expanded output so far in 2025. Such a scenario would weigh on the Oil price.
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.