West Texas Intermediate (WTI), futures on NYMEX, posts a fresh weekly high near $68.00 in European trading hours on Monday. The Oil price strengthens on hopes that China's fresh monetary stimulus plan will boost domestic consumption.
On Sunday, the Chinese ministry announced a comprehensive "special action plan" to ramp up economic growth. The ministry reported that the plan focuses on increasing residents' incomes, reducing financial burdens, and enhancing the consumption environment, Reuters report.
Such a scenario is favorable for the Oil price given that China is the largest importer of Oil in the world. Meanwhile, China's upbeat Retail Sales data for February has also offered some strength in the Oil price. The Retail Sales data, a key measure of consumer spending, rose by 4%, as expected.
Going forward, investors will focus on United States (US) President Donald Trump's talks with Russian leader Vladimir Putin on Tuesday to discuss over a temporary ceasefire with Ukraine. Last week, Ukraine agreed for a 30-day ceasefire after discussing with US officials in Saudi Arabia.
This week, investors will also focus on the Federal Reserve's (Fed) monetary policy decision, which will be announced on Wednesday. The Fed is almost certain to keep interest rates steady in the range of 4.25%-4.50% for the second time in a row.
Like all assets, supply and demand are the key drivers of WTI Oil price. 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 impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API's report is published every Tuesday and EIA's the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
Source; Fxstreet
