WTI Crude Oil climbs as EIA inventory draw and weaker Greenback fuel recovery
- WTI crude oil rises over 1% on Wednesday, recovering from a five-day low.
- EIA reports a 2.39M barrel draw, larger than forecast, but softer than last week’s sharp decline.
- A softer Greenback and resilient demand underpin the recovery after Tuesday’s steep 2.27% fall.
WTI (West Texas Intermediate) Crude Oil is rebounding on Wednesday after a sharp 2.27% drop in the previous session. At the time of writing, the US benchmark trades near $64.00 per barrel, up 1.2% on the day and recovering from a five-day low of $62.80 hit earlier in European trading hours.
The rebound is driven by a combination of a weaker US Dollar (USD) and stronger-than-expected US inventory data. The Greenback pulled back from recent highs, easing pressure on dollar-denominated commodities, while the Energy Information Administration (EIA) reported another drawdown in stockpiles, pointing to resilient fuel demand ahead of the Labor Day driving season.
Fresh EIA figures showed that crude inventories fell by 2.39 million barrels in the week ending August 22, compared with expectations of a 2.0 million draw. Although smaller than the hefty 6.01 million-barrel decline reported in the prior week, the latest numbers still underscored tightening supply. Storage at Cushing, Oklahoma, slipped by 838,000 barrels, while both gasoline and distillate inventories also declined, reflecting solid consumption trends.
The drawdown comes as refiners gear up for the peak of the US summer driving season, with fuel demand typically elevated through the Labor Day holiday in early September. The report also highlighted that US Crude demand rose to 9.24 million barrels per day, up from 8.84 million in the previous week.
Beyond US fundamentals, traders are also digesting fresh trade tensions after Washington’s additional 25% tariff on Indian goods took effect today, effectively doubling the overall levy to 50%. The move, aimed at punishing India for its continued imports of discounted Russian Crude, casts another layer of uncertainty over global trade flows. While India is expected to maintain its energy strategy and keep buying from Moscow, the tariffs risk straining bilateral ties and complicating global demand dynamics.
Looking ahead, market participants remain cautious despite the rebound, as supply developments and trade tensions continue to drive short-term volatility. However, the prospect of lower US interest rates is emerging as a supportive factor. Expectations grew after Federal Reserve (Fed) Chair Jerome Powell’s Jackson Hole remarks, with traders now pricing in an 87% probability of a 25 bps rate cut in September, according to the CME FedWatch Tool. Lower borrowing costs could stimulate economic activity, in turn bolstering demand for Oil.
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
Vishal Chaturvedi
FXStreet
I am a macro-focused research analyst with over four years of experience covering forex and commodities market. I enjoy breaking down complex economic trends and turning them into clear, actionable insights that help traders stay ahead of the curve.
