WTI oil prices fell to $59.35 during Monday’s Asian session. This decline came after the Novorossiysk port in Russia’s Black Sea reopened following a short closure due to a Ukrainian attack. This port is vital for Russian oil exports, handling 761,000 barrels daily. Its reopening has helped ease worries about supply disruptions. In October, the port exported 3.22 million tonnes of crude oil and 1.794 million tonnes of oil products. The market is anxious, waiting for several upcoming US economic reports. These reports may show a weaker job market in the US, which could lead the Federal Reserve to lower interest rates in December.

Factors Affecting WTI Prices

Lower interest rates usually cause the US Dollar to drop, making oil cheaper for international buyers, which could raise WTI prices. WTI, or West Texas Intermediate, is a key benchmark crude oil known for its low sulfur content. It is mostly traded in Cushing, USA. Factors that can impact WTI prices include supply and demand, geopolitical events, and decisions made by OPEC, a key oil cartel. Weekly reports from the API and EIA are important as they show changes in supply levels, which directly influence WTI prices. OPEC’s production quotas can also impact the market; cutting quotas can raise prices, while increasing them can lower prices. With WTI crude oil at about $59.35, the outlook appears downward for the next few days. This decline results directly from the reopening of Russia’s Novorossiysk port, which alleviates concerns about supply disruptions that had been supporting prices. The return of this supply flow could limit any short-term price increases. The volume from this Black Sea port is significant, exporting over 761,000 barrels per day of Russian crude in October. Following the supply shocks of 2022 and 2023, the market has become highly sensitive to disruptions, making the port’s reopening a bearish event. This new supply will likely be crucial in the upcoming weekly inventory reports.

Economic Factors and Market Fluctuations

On the demand side, things are more complicated after the recent end of the US government shutdown. A functioning government should help the economy, but we are now facing a backlog of economic reports. There are concerns these reports may reveal a weakening labor market, especially since initial jobless claims recently rose to their highest level in three months. This potential economic slowdown has shifted attention to the Federal Reserve, with markets now anticipating a higher chance of an interest rate cut in December. If rates are cut, the US Dollar—currently around 99.50 on the DXY index—could weaken, making oil more affordable for international buyers. This presents a possible bullish factor that contrasts with the bearish supply news. Thus, it is essential to monitor the American Petroleum Institute (API) inventory data expected on Tuesday. This report will be the first major indication of US demand following recent economic disruptions. A larger-than-expected drop in crude stocks could signal strong demand, helping to offset the impact of the new supply. Conversely, a surprise increase in stocks would confirm fears about a slowing economy. Given these mixed signals, we should brace for increased volatility in the oil markets. The immediate bearish pressure from Russia’s renewed supply is clear, but the likelihood of a weaker dollar introduces uncertainty. Traders might consider strategies to manage or take advantage of price swings, such as buying puts to hedge against declines or using options spreads. Create your live VT Markets account and  start trading  now.

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