WTI edges higher above $62.00, US-Iran negotiations in focus
- WTI price trades in positive territory near $62.30 in Wednesday’s Asian session.
- Traders will monitor the developments surrounding the US-Iran negotiations.
- The API crude oil stockpiles report is due later on Wednesday.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $62.30 during the Asian trading hours on Wednesday. The WTI price holds positive ground amid uncertainty and heightened tensions in the Middle East. Traders brace for the release of the American Petroleum Institute (API) report, which will be released later on Wednesday.
Iran announced the temporary partial closure of sections of the Strait of Hormuz on Wednesday to conduct naval exercises by its Islamic Revolutionary Guard Corps (IRGC), per Bloomberg. The Strait of Hormuz is one of the world’s most important oil transit chokepoints, about one-third of all waterborne crude oil exports pass through it. Concerns over crude oil disruption could boost the WTI price in the near term.
Meanwhile, Iranian Foreign Minister Abbas Araghchi stated on Tuesday that the US and Iran reached an understanding on the main “guiding principles” in talks aimed at resolving their longstanding nuclear dispute, but that does not mean a deal is imminent. Araghchi described talks with the U.S. as serious and constructive. Traders will closely monitor the developments surrounding the US-Iran talks. Any signs of easing tensions between the two countries could undermine the black gold.
The API crude oil stockpiles report will be published on Wednesday. A larger-than-expected crude oil inventory draw indicates stronger demand and could lift the WTI price, while a bigger build than estimated signals weaker demand or excess supply, which might weigh on the WTI price.
(This story was corrected on February 18 at 11:36 GMT to correct a mispelling in Iranian Foreign Minister Abbas Araghchi's surname.)
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
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.
