West Texas Intermediate (WTI) crude oil settled on Wednesday, paring part of its earlier losses as traders reacted to the latest US Energy Information Administration (EIA) report. At the time of writing, WTI is trading at $58.00, having rebounded after hitting an intraday low of $57.54.
The EIA announced a draw of 1.812 million barrels in U.S. commercial crude oil inventories for the week ending December 5, a larger decline than the expected draw of 1.2 million barrels, and reversing the previous week’s increase of 574,000 barrels.
However, the broader outlook for oil remains bearish. Traders remain cautious as fears of oversupply continue to dominate sentiment. US energy officials recently forecast that domestic crude oil production will rise to a record 13.6 million barrels per day this year, raising concerns that supply growth is outstripping demand.
Market focus now turns to OPEC’s monthly oil market report on Thursday, where traders will look for updated forecasts on global demand, production trends and supply forecasts through 2026.
Traders are also awaiting the policy decision the Federal Reserve will make later in the day. A 25 basis point rate cut is widely expected, but uncertainty over the Fed’s guidance kept risk appetite low. Any hawkish signal that prompts traders to scale back their expectations for continued easing in early 2026 could dampen the outlook for energy demand, adding another headwind for crude oil in the near term.
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 12 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.
