- WTI struggles to capitalize on a four-day-old recovery from the YTD trough touched this week.
- Hopes for a solid US fuel demand and concerns over supply disruptions in Russia lend support.
- The mixed fundamental backdrop warrants caution before placing aggressive directional bets.
West Texas Intermediate (WTI) US Crude Oil prices oscillate in a narrow trading range band during the Asian session on Friday and consolidate gains registered over the past four days. The commodity currently trades around the $72.40 region, below a one-week high touched on Thursday, and seems poised to snap a four-week losing streak.
The Energy Information Administration reported on Thursday that US Crude Oil stockpiles rose, while gasoline and distillate inventories fell last week. This, along with concerns over supply disruptions in Russia, acts as a tailwind for the black liquid. In fact, hopes for a peace deal between Russia and Ukraine seem to have faded in the wake of intensifying Ukrainian drone attacks on Russian Oil pumping stations.
Apart from this, the recent US Dollar (USD) slump to the lowest level since December 10, which tends to underpin the USD-denominated commodities, lends additional support to Crude Oil prices. However, worries that US President Donald Trump's trade tariffs could weaken the global economy and dent fuel demand hold back traders from placing aggressive bullish bets and contribute to capping the black liquid.
Furthermore, signs of slowing demand from the Eurozone and China warrant some caution before positioning for an extension of a modest recovery from the year-to-date low, around the $70.15 region touched earlier this week. Traders now look forward to the release of global flash PMIs, which might provide a fresh insight into the economic health and produce short-term trading opportunities around Crude Oil prices.
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.
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