Crude Oil turns higher on unconfirmed reports of US strikes on Iran
- WTI climbs through Friday's high and is on track for an eighth straight gain.
- Houthis claim hits on a Saudi oilfield and an Aramco site at the port of Yanbu.
- The EIA's weekly count is due Wednesday, with distillates 12% below average.
Unconfirmed reports of new US strikes on Iran have turned West Texas Intermediate (WTI) Oil higher on Monday, and it's on track for an eighth straight gain. It has climbed from a session low just above $96.50 to just above $99.00, its highest since September 16. The last leg came in two short bursts, and the second took it through Friday's high.
The US hadn't confirmed the reports, and Iran said it has no choice but to control the Strait of Hormuz and will only let friendly nations through. US President Donald Trump posted on October 8 that the US wouldn't attack Iran at any time before the November 3 midterms, and the price is up on reports that it has.
The Houthis said they hit the Shaybah oilfield and an Aramco site at Yanbu, though Saudi Arabia hadn't confirmed it. Yanbu is where Saudi Arabia's pipeline around Hormuz meets the Red Sea, so the claims put both Gulf export routes under threat in one session.
On the calendar
Wednesday's Energy Information Administration (EIA) report at 14:30 GMT follows the American Petroleum Institute (API) figures on Tuesday at 20:30 GMT. The EIA's previous report had distillate stocks 12% below their five-year average with refineries running at 93.5% of capacity, the shortage the Russian diesel deal is meant to ease. Baker Hughes counts US rigs drilling for Crude Oil at 17:00 GMT on Friday, after they fell by three to 459.
On the charts
The 50-day Exponential Moving Average (EMA) is short of $90.50, and WTI's gap of about $9.00 over it is the widest since mid-September, when the price last traded above $100.00. Intraday momentum went overbought on the jump through Friday's high and has cooled since.
WTI spot daily chart
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
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.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
Author
Joshua Gibson
FXStreet
Joshua joins the FXStreet team as an Economics and Finance double major from Vancouver Island University with twelve years' experience as an independent trader focusing on technical analysis.
