WTI declines below $91.00 despite Iran threats

WTI price posts modest losses near $90.85 in Friday’s early Asian session.
Iran threatened US bases and Hormuz as war talks drag on with no deal in sight.
OPEC Secretary General said oil demand is to remain robust, with no change to estimates.

Lallalit Srijandorn FXStreet

West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $90.85 during the early Asian trading hours on Friday. The WTI price trades with mild losses as traders continue to assess the developments surrounding the US-Iran peace deal.

Iran’s Foreign Minister Abbas Araghchi stated that the Strait of Hormuz falls within the territorial waters of Iran and Oman and warned that US bases in the region remain targets for retaliation. Meanwhile, US President Donald Trump stated early Wednesday that Iran is “pretty close” to signing a peace agreement with the US and that “it could happen over the weekend.”

Israeli Defence Minister Israel Katz said on Thursday that Israel will continue operations in Lebanon despite a ceasefire, and Lebanese residents forced to flee will not be able to return. Despite the ongoing conflict in the Middle East, the WTI price declines after three days of gains amid hopes for diplomatic progress.

US crude oil inventories continued their downward plunge last week. According to the US Energy Information Administration (EIA) report, crude oil stockpiles in the US for the week ending May 29 fell by 7.974 million barrels, compared to a decline of 3.327 million barrels in the previous week. The market consensus was for 4.0 million barrels.

The Organization of the Petroleum Exporting Countries (OPEC) ‌Secretary General Haitham Al Ghais said on Thursday that the organisation expects robust oil demand growth and is not changing its estimates despite the Middle East conflict and closure of the Strait of Hormuz. He added that investments in the oil industry should not be affected by "one-off events" that happen anywhere in the world.

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.

USD/JPY eyes August swing low, near 155.20 ahead of US NFP

USD/JPY retests the August monthly swing low during the Asian session on Friday as a more hawkish repricing of BoJ rate-hike bets and a suspected intervention continue to underpin the Japanese Yen. Meanwhile, the US Dollar is seen consolidating the previous day's heavy losses amid soft US bond yields, further weighing on the currency pair as traders keenly await the US NFP report.

AUD/USD consolidates above 0.7200; US NFP awaited

AUD/USD holds steady above 0.7200, near its highest level since mid-May, as bulls await the US NFP report for more cues on the Fed's policy path before placing fresh bets. Meanwhile, the recent decline in US bond yields keeps the US Dollar depressed near its lowest level in over a week and acts as a tailwind for the Aussie amid the RBA's hawkish tilt.

Gold: Tempered hawkish Fed bets lift it near $4,500

Gold price holds onto Thursday’s gains at around $4,470 as traders trim Fed’s interest rate expectations. Hawkish Fed bets cool down after expression of confidence from Fed’s Waller that price pressures are decelerating. Investors keenly await the US NFP data for August.

Bitcoin clears $80,000 on reduced rate hike odds – Zcash, Ethena rise

Bitcoin is trading above $80,000 on Friday, sustaining the broader cryptocurrency market's risk-on sentiment. Federal Reserve (Fed) Governor Christopher Waller signaled support for a potential pause in interest rates on Thursday, lowering the odds of a September rate hike to 50%. Zcash (ZEC) and Ethena (ENA) emerge as top performers over the last 24 hours.

NFP preview: Can jobs data ease rate hike fears?

As we move to the end of the week, the focus shifts to the macro data, and to the strength of the labour market in the US. August payrolls are released on Friday at 1330 BST, and the market is expecting a reading of 58k. The unemployment rate is expected to remain steady at 4.1% and wage growth is expected to moderate slightly to 3% last month, down from 3.2%.

Diesel’s record $100 warning: The oil shock hiding in plain sight

The Oil market may look calmer than it did a few months ago, but diesel is sending a very different message. The US diesel crack spread, the premium of ultra-low sulphur diesel futures over WTI, recently surged above $100 per barrel for the first time, reaching an intraday record of just over $102.00.