WTI declines below $61.50 amid hopes of US-Iran nuclear deal

WTI price tumbles to around $61.20 in Friday’s early Asian session.
Trump said the US was getting close to securing a nuclear deal with Iran.
Oil inventories climbed by 3.454 million barrels in the week ended May 9, according to the EIA.

Lallalit Srijandorn FXStreet

West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $61.20 during the Asian trading hours on Friday. The WTI price edges lower on expectations that the United States (US) and Iran may soon reach a deal over Tehran’s nuclear program.

A top adviser to Iran’s supreme leader stated on Wednesday that Iran is ready to sign a nuclear deal with certain conditions with US President Donald Trump in exchange for lifting economic sanctions. On Thursday, Trump said that the US was getting close to securing a nuclear deal with Iran, and Tehran had "sort of" agreed to the terms. The developments of a possible nuclear deal could weigh on the WTI price.

"(Any) immediate sanctions relief stemming from a nuclear agreement could unlock an additional 0.8 million barrels per day of Iranian crude for the global market – an undeniably bearish development for prices," said SEB analyst Ole Hvalbye.

A surprise rise in US crude oil inventories last week has prompted investor concerns of excess supplies, which contributes to the WTI’s downside. The US Energy Information Administration (EIA) weekly report showed crude oil stockpiles in the US for the week ending May 9 climbed by 3.454 million barrels, compared to a fall of 2.032 million barrels in the previous week. The market consensus estimated that stocks would drop by 1.0 million barrels.

On the other hand, the weaker Greenback might cap the downside for the USD-denominated commodity price. Another soft inflation print suggested that companies are absorbing some of the hit from higher tariffs. The US Producer Price Index (PPI) rose 2.4% YoY in April, following the 2.7% increase in March, according to the Bureau of Labor Statistics on Thursday. This figure came in below the market expectation of 2.5%.

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

Lallalit Srijandorn

FXStreet

Lallalit Srijandorn is a Parisian at heart. She has lived in France since 2019 and now becomes a digital entrepreneur based in Paris and Bangkok.

AUD/USD hangs near three-week low, below 0.6950 as traders await US NFP report

AUD/USD hits a three-week low during the Asian session on Friday as the RBA’s dovish shift and a rout in equity markets weigh on the risk-sensitive Aussie. However, the recent slump in US bond yields to a two-month low keeps US Dollar bulls on the back foot and limits losses for the currency pair as traders look to the US NFP report for a fresh impetus.

USD/JPY bounces off three-week low; keeps the red near 157.65 as focus remains on US NFP

USD/JPY bounces off the weekly low set during the Asian session, as bears turn cautious ahead of the US NFP report due later this Friday. The upside seems limited as the recent slump in US bond yields and hopes of Iran war de-escalation undermine the US Dollar. Moreover, a hawkish BoJ and intervention risks support the Japanese Yen, capping the pair.

Gold retakes $4,100 as weak US bond yields and USD support ahead of US NFP

Gold attracts dip-buyers during the Asian session on Friday, stalling the previous day’s pullback from a two-week high. The recent fall in US bond yields undermines the US Dollar amid hopes for Iran diplomacy, supporting the bullion. However, a higher-rate environment warrants caution for XAU/USD bulls as focus remains on the crucial US NFP report.

Ethereum falls 7% as AI sell-off hits crypto

Ethereum falls 7% to $2,230 on Thursday as AI stock sell-offs spilled into the crypto market. The top altcoin's decline wiped out all of Wednesday's post-US midterm gains, triggering $181.8 million in ETH liquidations over the past 24 hours. Long liquidations dominated, totaling $149.7 million, according to Coinglass data.

Neither the election nor the US Dollar: Why Friday's payrolls hold the key to Gold's next move

Gold has climbed back above $4,000 as the US Dollar weakened following a Democratic sweep in the US midterm elections. However, with every Gold rally facing heavy selling throughout the year, investors are looking to Friday's Nonfarm Payrolls report to determine whether this move marks a sustainable breakout or just another temporary rebound.

US Dollar breaks below 101.50 as Democrats sweep Congress

The US Dollar (USD) comes under heavy selling pressure on Wednesday, with the US Dollar Index (DXY) falling around 0.5% to trade near 101.35 after sliding below the 101.50 level. The Greenback retreats to its lowest level in four weeks as investors reassess the political and economic outlook following the Democratic Party's sweeping victory in the United States (US) midterm elections.