WTI climbs to near $66.00 on trade optimism, US crude stock draw

WTI price edges higher to near $65.95 in Friday’s early Asian session.
Optimism surrounding fresh US trade deals and US crude draws support the WTI price.
Crude inventories in the United States declined by 3.169 million barrels last week, noted EIA.

Lallalit Srijandorn FXStreet

West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $65.95 during the early European trading hours on Friday. The WTI extends the rally due to optimism over potential United States (US) and European Union (EU) trade progress and a larger-than-expected U.S. crude inventory draw.

Progress in tariff negotiations between the US and the EU eases pressure on the global economy and underpins the WTI price. Both trade partners are reportedly working on a deal that would impose a 15% tariff on most EU goods to the US, following a similar US-Japan agreement, and the prospect of a successful trade deal has sparked a risk-on mood and boosted investor sentiment.

Furthermore, US crude oil inventories fell last week, suggesting a robust demand in the world's largest crude consumer, supporting the black gold. The US Energy Information Administration (EIA) weekly crude oil stock report showed crude oil stockpiles in the US for the week ending July 18 declined by 3.169 million barrels, compared to a fall of 3.859 million barrels in the previous week. The market consensus estimated that stocks would decrease by 1.4 million barrels.

Investors will closely monitor the developments surrounding the US-China meeting next week. US Treasury Secretary Scott Bessent stated that he will meet with Chinese officials in Stockholm next week to discuss extending the trade truce. Any signs of renewed tensions could spark fresh concern over global fuel demand and undermine the WTI price in the near term.

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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