WTI maintains its position in the positive territory, trades around $75.50
- WTI price receives upward support due to the expectation of a PBoC MLF rate cut.
- EIA Crude Oil Stocks Change declined by 9.233M barrels compared to the previous drop of 2.492M barrels.
- US Baker Hughes anticipates a decline in spending on drilling in North America in 2024.
West Texas Intermediate (WTI) oil price grapples to continue its gains for the second consecutive session. The strength in the Crude oil prices is attributed to the recent development of the Medium-term Lending Facility (MLF) rate cut, along with the decline in the US Crude Oil stockpiles. The WTI oil price inches higher near $75.50 per barrel during the Asian session on Thursday.
The People's Bank of China (PBoC) is speculated to consider cutting the Medium-term Lending Facility (MLF) rate in the current quarter. This anticipation follows the recent announcement by PBoC Governor Pan Gongsheng, informing about a reduction of the Required Reserve Ratio (RRR) by 50 basis points starting from February 5th.
A potential cut in the MLF rate, coupled with the RRR reduction, is expected to provide additional liquidity and support economic growth. This, in turn, could stimulate consumption, including the consumption of crude oil products, by China, which is the world's largest oil importer.
According to the Energy Information Administration's (EIA) weekly report released on Wednesday, Crude Oil Stocks Change experienced a significant decline of 9.233 million barrels for the week ending on January 19. This marks a substantial decrease compared to the previous week's reading, which reported a drop of 2.492 million barrels. Severe weather conditions, such as storms and cold snaps disrupted Crude oil production and transportation particularly in North Dakota, leading to fluctuations in inventory levels.
US oilfield technology firm Baker Hughes has stated that it anticipates a decline in spending on drilling and well completion in North America in 2024, citing ongoing volatility in commodity prices. The company's outlook reflects the cautious approach of shale producers, who are seeking to reduce drilling activities in response to weak prices in the oil market.