The price of West Texas Intermediate (WTI) crude experienced a slight rebound on Wednesday after a period of decline, driven by short-covering.
This modest recovery directly responded to previous lows caused by a decrease in demand projections from OPEC. The Organization of Petroleum Exporting Countries lowered its expectations for the fourth time, reflecting weaker demand in major economies such as China and India.
However, the price gain was limited by a strengthening U.S. dollar, which reached a seven-month high.
At the New York market opening, WTI traded near $67 dollars per barrel, though it later rebounded and stabilized around $68 dollars. This change signals market resilience in the face of reduced global demand, which has dampened the upward momentum of crude prices.
WTI price fluctuations are closely related to supply and demand factors and movements in the dollar’s value, making oil more expensive for buyers using other currencies.
On a macro level, the U.S. energy sector continues to show increased production, projected to reach a record 13.23 million barrels daily. This growth in local production, alongside a global increase expected to reach 102.6 million barrels per day, has added pressure on crude prices by increasing market availability. This supply growth contrasts with OPEC’s forecasts, and the International Energy Agency is expected to provide a new demand outlook in upcoming reports.
Geopolitics also plays an important role in shaping the WTI market. In a recent call, Russian President Vladimir Putin and Saudi Crown Prince Mohammed bin Salman emphasized the need to maintain “close coordination” within OPEC+, which could help sustain supply balance. Additionally, instability in the Middle East—particularly the possibility of a more significant conflict between Iran and Israel—poses a risk that could disrupt operations at Iranian oil facilities, affecting supply and thereby influencing prices.
Finally, the impact of a strong dollar on WTI cannot be overlooked. A robust U.S. currency, supported by inflation data meeting expectations, limits crude’s upside potential by making oil more expensive for holders of other currencies. This has led to lower global demand, and with the Federal Reserve committed to maintaining rates, the situation seems set to continue limiting price gains for crude.
In conclusion, WTI’s performance reflects a complex interplay of economic, geopolitical, and supply-demand factors. Despite the recent price recovery, the outlook for crude remains uncertain, partly due to OPEC’s bearish forecasts and dollar strength. Record production in the U.S. and coordination within OPEC+ provide stabilizing elements, but geopolitical risks and global monetary policies may alter this equation. Ultimately, WTI’s future will depend on how these factors evolve and how well the market adapts.
