WTI drops to near $68.00 as OPEC cuts demand view

• WTI price remains on the defensive near $68.00 in Wednesday’s early Asian session.
• OPEC's latest downward revision for demand growth, a stronger USD and weak China demand drag the WTI price lower. 
• Investors will focus on the US CPI inflation data, which is due later on Wednesday. 

West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $68.00 on Wednesday. The WTI price edges lower after the Organization of the Petroleum Exporting Countries (OPEC) cut its forecast for global oil demand growth in 2024.

OPEC's latest downward revision for demand growth exerts some selling pressure on the black gold. OPEC stated in a monthly report on Tuesday that world oil demand will rise by 1.82 million barrels per day (bps) in 2024, down from growth of 1.93 million bpd it expected last month. OPEC also lowered its 2025 global demand growth estimate to 1.54 million bpd from 1.64 million bpd, marking the producer group's fourth consecutive downward revision.

Disappointment over China's latest stimulus plan undermines the WTI price as China is the world's second-biggest oil consumer. Last week, China announced a stimulus plan of 10 trillion yuan, but analysts worry that it would not be enough to stimulate the economy. This, in turn, has raised fears about China's likely decline in oil consumption.

The stronger US Dollar (USD) contributes to the WTI’s downside as it makes USD-denominated Oil prices more expensive. Meanwhile, the US Dollar Index (DXY), a measure of the USD's value relative to a basket of foreign currencies, climbs to fresh six-month peaks past the 106.00 barrier. Investors will keep an eye on the US October Consumer Price Index (CPI) inflation data on Wednesday for fresh impetus. In case of the surprise softer-than-expected outcome, this could weigh on the Greenback and help limit the WTI’s losses. 

WTI Oil FAQs

What is WTI Oil?

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.

What factors drive the price of WTI Oil?

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.

How does inventory data impact the price of WTI Oil

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.

How does OPEC influence the price of WTI Oil?

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.