WTI crude prices rise to $62.80 as OPEC+ dials down supply hike plans
- Crude prices bounce up amid hopes of more moderate supply hikes from October.
- OPEC+ announced a 137,000 bpd increase for next month.
- Trump has flagged a secondary round of sanctions against Russia.
Crude Oil is trading higher on Monday, amid news reporting that the next OPEC+ supply hike scheduled for October will be lower than previously expected, while the recent attacks in Ukraine have raised speculation about further sanctions on Russian crude.
The US benchmark West Texas Intermediate (WTI) is trading about $1 higher on the day, reaching intra-day highs right above $62.80, with Friday’s high, at $63.25, coming closer.
OPEC+ countries agree on a more moderate supply hike
The OPEC+, a group that includes OPEC countries plus Russia and other allies, agreed on Sunday to hike output higher, by 137,000 barrels per day, well below the 555,000 bpd and the 411,000 bpd hikes announced in September and August, respectively.
Also on Sunday, US President Trump affirmed that he is ready to pass a second round of sanctions on Russia in retaliation for the weekend’s attacks on Ukraine, which killed four people and set Kyiv’s government building ablaze
Trump set a 50% tariff on imports from India last month in response to Delhi’s purchases of Russian Oil, and the country is speculating on an extension of similar measures to other Russian Crude buyers.
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.