WTI Crude Oil prices ease after failing to test $68.00

West Texas Intermediary (WTI) losses near 1.20% after failing to test $68.00.
Monthly gains for WTI are close to 10% as tensions in the Middle East emerge on Thursday.
The US and Iran prepare for another round of nuclear talks, which could provide an additional catalyst for WTI.

Tammy Da Costa, CFTe®FXStreet

West Texas Intermediary (WTI) is trading lower in the American session on Thursday, erasing a portion of gains from the prior session.

After surging 5.22% on Wednesday, prices broke above the 100-day Simple Moving Average (SMA), reaching a high of $67.82.

However, despite the optimistic boost received from the de-escalation in US-China trade tensions and declining stockpiles, risk sentiment remains fragile. US President Donald Trump’s tariff threats have resurfaced, tensions in the Middle East are escalating, and trade tensions persist.

Additionally, the recent recovery in oil prices has resulted in an approximate 10% price gain this month. This may warrant a correction in prices, at least in the near term.

From a fundamental standpoint, tariffs and trade tensions often result in diminishing economic growth prospects, dampening demand for Oil. However, tensions in the Middle East, particularly in Iran, could lead to higher prices in the event of supply disruptions.

NBC news reported, citing five people familiar with the matter, that Israel is considering taking military action against Iran in the coming days. At the same time, Trump confirmed on Wednesday that US personnel are being moved out of parts of the Middle East due to the escalating tensions between Israel and Iran. This occurs ahead of the sixth round of nuclear talks between the US and Iran, scheduled for this weekend in Oman.

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

Tammy Da Costa, CFTe®

FXStreet

Tammy is an economist and market analyst with a deep passion for financial markets, particularly commodities and geopolitics.

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