WTI climbs toward $63.00 as tensions rise in Europe, Middle East

WTI price rises after Russia launched airstrikes in western Ukraine near the Polish border.
The EU proposed its 19th sanctions package against Russia, targeting Chinese and other foreign firms buying Russian Oil.
Britain, Canada, Australia, and Portugal recognized the Palestinian state, drawing a furious response from Israel.

Akhtar Faruqui FXStreet

West Texas Intermediate (WTI) Oil price halts its three-day losing streak, trading around $62.90 during the early European hours on Monday. Crude Oil prices gain ground amid rising geopolitical tensions in Europe and the Middle East.

Reuters cited Michael McCarthy, CEO of Moomoo Australia and New Zealand, saying, "Reports over the weekend that Russia was threatening over the Polish border have provided traders with a timely reminder of the ongoing risks to European energy security from the north east."

Russia launched airstrikes targeting western Ukraine near the border with Poland, prompting Poland’s NATO-aligned armed forces to deploy aircrafts on Saturday to ensure the safety of Polish airspace. Three Russian military jets also violated NATO Estonia's airspace on Friday, while Germany's air force reported that a Russian military plane entered neutral airspace on Sunday over the Baltic Sea.

On Friday, the European Union (EU) proposed its 19th sanctions package against Russia, featuring a ban on Russian LNG imports, restrictions on 118 additional shadow vessels, and measures targeting Chinese and other foreign firms purchasing Russian Oil, in a fresh push to pressure Moscow to end the war in Ukraine.

Moreover, Britain, Canada, Australia, and Portugal recognized the Palestinian state, prompting a furious response from Israel and adding to jitters in the key Oil-producing region. Though Oil’s upside remained capped by ongoing concerns over ample supply and softening demand, as Iraq boosted exports with the gradual rollback of voluntary OPEC+ production cuts, adding to supply pressures.

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

Akhtar Faruqui

FXStreet

Akhtar Faruqui is a Forex Analyst based in New Delhi, India. With a keen eye for market trends and a passion for dissecting complex financial dynamics, he is dedicated to delivering accurate and insightful Forex news and analysis.

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