WTI crude oil price on Wednesday

Oil is one of the most significant sources of energy in the world. It played a crucial role in many spheres and continues to affect the global economy. The new technologies such as electric cars are threatening the oil market, but it is too early to say that oil is outdated. People around the world pay attention to oil prices, and its prices often reflect the trends of the global economy.

Oil prices increased on Wednesday as U.S. stockpiles diminished for a fourth week in a row. The cost of West Texas Intermediate (WTI) crude oil rose by 93 cents or 1.6% to $58.76 a barrel. Another benchmark is the Brent crude oil, and the price of this benchmark increased by 70 cents or 1.1% to $64.86 a barrel. There are several factors which affected oil prices.

The U.S. stockpiles are decreasing since June as fears of oversupply is declined amid the global trade disputes. Crude inventories fell by 8.1 million barrels in the week to July 5 to 461.4 million barrels. Analysts expected that crude inventories would decrease by 3.1 million barrels. The U.S. Energy Information Administration will release the official data later on Wednesday.

Another factor is the trade war between the U.S. and China. This trade dispute is a serious issue. The U.S. is the biggest consumer as well as a producer in the world. China is also one of the major consumers when it comes to oil and other commodities. The problem is that the global economy is slowing down, and the trade war between the countries such as the U.S. and China further aggravate the global economic issues.

The crude oil production

OPEC and its allies produced 30 million barrels a day in June. This level remained the same as in May. At the beginning of the month, OPEC in cooperation with prominent producers such as Russia decided to reduce the daily production until March 2020. It is important to remember that countries are sometimes unable to fulfill the conditions of the agreement. For example, compliance with production quotas decreased in June from 117% in May to 104% in June.

At the same time, crude oil production in the U.S. will reach 12.36 million barrels per day. It means that the daily output will outperform the record from the last year when the number reached 10.96 bpd. Brent crude oil price increased by 20% since the beginning of 2019. This year the production of WTI crude oil will increase by 2 million barrels a day. In U.S. companies operate 114,000 oil wells and the minimum price when WTI crude is profitable is $30 a barrel.

The oil prices rose on Wednesday morning. At the moment, it is hard to predict whether this trend will continue during the upcoming days. The U.S. economy is growing, but the trade war and regional tensions make the oil prices unstable. Several days ago Iran declared that it is ready to speed up the uranium enrichment program. In the case of military confrontation in the Persian Gulf, it will have a massive impact on the oil industry.