West Texas Intermediate (WTI) crude oil prices significantly increased by more than 2%, reaching approximately $70.60 per barrel during the Asian market session.
This price rise was mainly due to OPEC+’s decision to delay the planned production increase for December by at least one month.
The group’s decision aims to stabilize prices amid growing market pressures, influenced by a combination of both external and internal factors in the economies of the central consumer and producer countries.
One of the factors impacting prices is the weak global demand for crude oil, particularly from China, which is currently experiencing an economic slowdown.
This reduction in the Chinese market is driven by internal factors and a series of structural issues that have affected its capacity to consume crude oil in recent months. Additionally, increased production from non-OPEC+ countries has added significant pressure on the market, forcing cartel member countries to reconsider their production policies.
Furthermore, the weakness of the U.S. dollar has played a key role in the rise in oil prices. The volatility of the U.S. currency, exacerbated by uncertainty surrounding the upcoming U.S. elections, directly affects the cost of crude oil, given that oil is priced in dollars. The dollar depreciation tends to make crude oil more affordable for international buyers, increasing demand and, consequently, prices.
Moreover, the Chinese economy could benefit from potential government stimulus, representing another positive factor for crude prices. In response to the economic slowdown, the Chinese government has announced measures to stimulate the economy, aiming to boost energy demand. This, in turn, would increase the need for oil imports, driving up prices. The stimulus measures in China are expected to focus on infrastructure development and support programs for key sectors, which could stabilize and increase oil consumption in the medium term.
Finally, U.S. energy policy will also impact crude oil prices. Both presidential candidates have expressed their intent to increase domestic oil production. This policy, however, could lead to an increase in the global crude oil supply, affecting market dynamics and potentially slowing the rise in prices over the long term. In combination with OPEC+ strategies, U.S. energy policies will be crucial factors for balance in the oil market.
In conclusion, the recent rise in WTI crude oil prices results from a complex interplay of geopolitical and economic factors, including the OPEC+ decision, demand in China, the weakness of the dollar, and U.S. energy policies. In the short term, OPEC+’s delay in production increases and potential economic stimulus in China could sustain higher prices. However, the U.S. elections and future energy policies could introduce new variables to the market, influencing oil price growth prospects in the coming months.
