Knowledge Corner : WTI Crudeoil - K Karthik Raja Share Market Training
Knowledge Corner : WTI Crudeoil - K Karthik Raja Share Market Training
Knowledge Corner : WTI Crudeoil
* What is WTI Oil?
* WTI stands for West Texas Intermediate, a type of crude oil.
* One of the three major types of crude oil (others: Brent and Dubai Crude).
* Called “light” and “sweet” because it has:
* Low gravity (lightweight).
* Low sulfur content (sweet).
* High-quality oil, easy to refine.
* Mainly sourced in the U.S. and distributed via the Cushing hub (big oil storage/transport hub).
* Acts as a benchmark price for crude oil in global markets.
* What factors drive the price of WTI Oil?
* Supply and demand (main driver).
* Global economic growth → higher demand; weak growth → lower demand.
* Political instability, wars, sanctions → disrupt supply, push prices up.
* OPEC decisions (oil-producing countries’ policies) strongly influence supply.
* US Dollar value matters:
* Oil is traded in USD.
* Weak USD → oil cheaper for others, demand rises.
* Strong USD → oil more expensive, demand falls.
How does inventory data impact the price of WTI Oil?
* Weekly oil inventory reports (from API and EIA) show supply and demand trends.
* Drop in inventories → less oil available → prices rise.
* Increase in inventories → more oil available → prices drop.
* API report: released every Tuesday.
* EIA report: released the next day (Wednesday).
* Both reports are usually very similar (within 1% accuracy).
* EIA is considered more reliable (government source).
How does OPEC influence the price of WTI Oil?
* OPEC = Organization of the Petroleum Exporting Countries (12 major oil producers).
* They decide production quotas for member countries.
* Their decisions directly affect oil supply and prices:
* Cut production (lower quotas) → supply tightens → prices go up.
* Increase production (higher quotas) → supply rises → prices go down.
* OPEC+ (includes other nations like Russia) also influences global oil supply and price.
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