WTI climbs above $68.50 as Trump raises pressure on Russia

WTI price rises to around $68.75 in Wednesday’s early Asian session.
Growing worries about tighter supplies support the WTI price.
Crude inventories in the United States rose by 1.539 million barrels last week, noted API.

Lallalit Srijandorn FXStreet

West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $68.75 during the Asian trading hours on Wednesday. The WTI climbs to the highest levels in over a month amid growing concerns over global supply risks.

US President Donald Trump reiterated that the United States (US) may impose additional tariffs on Russia if Moscow does not make progress toward ending the war in Ukraine within 10 days. Rising fears over tighter supplies due to additional sanctions on Russia boost the WTI price.

“The new deadline caught many analysts by surprise and, if enforced, could tighten Russian crude and fuel supplies to the global market,” said Dennis Kissler, senior vice president for trading at BOK Financial Securities.

About the data, US crude oil inventories rose last week, which might cap the upside for the WTI’s price. The American Petroleum Institute (API) weekly crude oil stock report showed crude oil stockpiles in the US for the week ending July 25 increased by 1.539 million barrels, compared to a decline of 577,000 barrels in the previous week. The market consensus estimated that stocks would fall by 2.5 million barrels. So far this year, crude oil inventories are up nearly 13 million barrels, according to Oilprice calculations of API data.

Oil traders will keep an eye on the US Energy Information Administration (EIA) weekly crude oil stock report later on Wednesday. Also, the US Federal Reserve (Fed) interest rate decision will take center stage. The US central bank is likely to leave interest rates unchanged at 4.25% to 4.50% at the end of its two-day monetary policy meeting on Wednesday.

WTI Oil FAQs

What is WTI Oil?

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.

What factors drive the price of WTI Oil?

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.

How does inventory data impact the price of WTI Oil

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.

How does OPEC influence the price of WTI Oil?

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

Lallalit Srijandorn

FXStreet

Lallalit Srijandorn is a Parisian at heart. She has lived in France since 2019 and now becomes a digital entrepreneur based in Paris and Bangkok.

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