WTI consolidates below $93.00 as traders assess likelihood of US-Iran peace deal
- WTI struggles to capitalize on the previous day’s bounce from over a two-week low.
- Traders seem hesitant and opt to wait for more clarity about the US-Iran peace deal.
- The USD remains on the defensive and further helps limit losses for the commodity.
West Texas Intermediate (WTI) – the benchmark US Crude Oil price – oscillates in a range during the Asian session on Thursday and, for now, seems to have stalled the previous day's modest bounce from sub-$87.00 levels, or over a two-week low. The black liquid currently trades just above mid-$92.00s, down nearly 0.65% for the day, amid mixed cues.
Investors turned optimistic over a potential agreement to end the Iran war and reopen the Strait of Hormuz after US President Donald Trump said that a deal with Iran was very possible. This, in turn, is seen as a key factor undermining Crude Oil prices, though the downside remains cushioned as investors reassess the likelihood of a peace deal. Adding to this, a broadly weaker US Dollar (USD), which tends to benefit the USD-denominated commodity, contributes to limiting losses for the black liquid.
Iran's state-linked media pushed back against claims of a broader agreement, while the Iranian Students' News Agency said that the US proposal includes provisions that Tehran has already rejected in recent days. Furthermore, the BBC reported that Iran is still reviewing the US proposal to end the conflict and lift the American blockade on Iranian ports. Meanwhile, Trump threatened that Iran will be bombed “at a much higher level and intensity than it was before” if it doesn’t agree to a peace deal.
Meanwhile, the initial market reaction to the upbeat US ADP report on private-sector employment turns out to be short-lived amid diminishing odds for a rate hike by the US Federal Reserve (Fed) in 2026. Fading hawkish expectations, in turn, fail to assist the USD to build on the overnight bounce from a nearly three-week low, which holds back traders from placing aggressive bearish bets on Crude Oil prices. This, in turn, warrants some caution before positioning for any further depreciation.
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
Haresh Menghani
FXStreet
Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.
