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- WTI fell back below the $81.00 level on Friday, testing the $81.50 level.
- The Energy Information Administration announced a surprise increase in natural gas reserves, dampening withdrawal hopes.
- US crude oil productivity remains near all-time highs.
West Texas Intermediate (WTI) crude oil hit a new intra-week high early Friday before falling back into negative territory for the day after the Energy Information Administration (EIA) noted that US crude oil production remains near all-time highs. And a greater level. – Expected accumulation of natural gas reserves.
The Energy Information Administration announced a 71 Bcf increase in the amount of working natural gas available in storage, bringing U.S. reserves to a multi-month high of 3,045 Bcf for the week ending June 14. The previous week’s increase of 74 Bcf was expected to drop sharply to just 69 Bcf.
With natural gas reserves filling up before peak summer cooling demand, crude oil is unlikely to see significant increases in demand, dampening hopes for a sharp decline during the summer.
US June Purchasing Managers’ Index (PMI) numbers also beat the Street on Friday, putting pressure on broad market hopes for an interest rate cut. Although the Federal Reserve (Fed) is unlikely to have to accelerate the pace of interest rate cuts in 2024, crude oil markets are forecasting near-term upside as investors lean heavily on hopes of lower interest rates to ease lending and financing costs.
Technical forecast for West Texas Intermediate crude oil
Hesitant bulls trimmed the upside momentum in WTI on Friday, pulling the intraday price action into a range of near-term uptrend lines. Stronger technical support is found at the 200 hourly exponential moving average (EMA) at $79.35. Despite hesitation in the second half of the US market session on Friday, US crude oil managed to hit a seven-week high above $81.60 before settling lower.
Daily candlesticks are starting to show signs of exhaustion as WTI’s technical recovery above the 200-day moving average at $78.87 begins to ease. Barring a return of strong bidding, WTI could be poised to pull back to the latest swing low near $72.50.
Hourly chart of West Texas Intermediate crude oil
Daily chart of West Texas Intermediate crude oil
Frequently asked questions about West Texas Intermediate crude oil
West Texas Intermediate oil is a type of crude oil that is sold in international markets. WTI stands for WTI, and is one of three main types including Brent and Dubai crude. WTI is also referred to as “light” and “sweet” due to its relatively low gravity and sulfur content, respectively. It is considered a high quality oil and easy to refine. It is sourced from the United States and distributed through the Cushing Hub, considered the “pipeline crossroads of the world.” It is a benchmark for the oil market and the price of WTI is frequently quoted in the media.
Like all assets, supply and demand are the main drivers of the price of WTI. 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 affect prices. Decisions by OPEC, a group of major oil-producing countries, are another major driver of the price. The value of the US dollar affects the price of WTI, as oil is mostly traded in US dollars, so a weak US dollar can make oil more affordable and vice versa.
Weekly oil inventory reports from the American Petroleum Institute (API) and the Energy Information Agency (EIA) influence the price of WTI. Changes in inventories reflect fluctuations in supply and demand. If data shows a decline in inventories, this could indicate increased demand, leading to higher oil prices. High inventories can reflect increased supply, causing prices to fall. The API report is published every Tuesday and the EIA report the next day. Their results are usually similar, falling within 1% of each other 75% of the time. EIA data is more reliable, because it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 13 oil-producing countries that collectively decides production quotas for member countries at meetings held twice a year. Their decisions often affect WTI prices. When OPEC decides to cut its quotas, it can tighten supply, causing oil prices to rise. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten additional non-OPEC members, most notably Russia.
