- WTI price depreciates despite growing concerns over potential supply disruptions triggered by new US sanctions targeting Russian Oil.
- API Weekly Crude Oil Stock declined by 2.6 million barrels in the previous week, below the expected 3.5 million barrel reduction.
- US EIA suggested that Oil prices are expected to face downward pressure over the next two years.
West Texas Intermediate (WTI) Oil price remains in the negative territory for the second successive day, trading around $76.60 per barrel during the European session on Wednesday. However, crude Oil prices could recover as tighter supply concerns and declining US stockpiles.
Oil prices may continue to rise amid heightened concerns over potential supply disruptions driven by new US sanctions on Russian Oil revenue. On Friday, the US Treasury imposed broader sanctions targeting Russian Oil producers Gazprom Neft and Surgutneftegas, along with 183 vessels involved in transporting Russian Oil.
Additionally, American Petroleum Institute (API) data reported a 2.6 million barrel drop in US crude inventories for the week ending January 10, below the anticipated 3.5 million barrel reduction. This follows a previous decline of 4.022 million barrels. The EIA Crude Oil Stocks Change report, scheduled for release later in the North American session, is also expected to show a 3.5 million barrel decline for the prior week.
US Energy Information Administration (EIA) suggested in its Short-Term Energy Outlook report released on Tuesday that Oil prices are expected to face downward pressure over the next two years as global production growth surpasses demand. Many analysts anticipate an oversupplied Oil market in 2025, following a sharp slowdown in demand growth in 2024, particularly in the largest energy-consuming nations, the US and China, per Reuters.
The EIA now projects global Oil and liquid fuel production to average 104.4 million barrels per day (bpd) in 2025, up from its previous forecast of 104.2 million bpd. In contrast, global Oil demand is expected to average 104.1 million bpd, down from the earlier estimate of 104.3 million bpd and still below pre-pandemic trends, the EIA noted.
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.
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