WTI falls near $57.50 as US-Russia-Ukraine peace talks progress

WTI price falls as US efforts to advance a Russia-Ukraine peace deal raise the prospect of increased crude supply.
Rubio said Geneva talks were “very worthwhile,” the most productive in “a very long time.”
US sanctions on Rosneft and Lukoil have stranded nearly 48 million barrels of Russian crude at sea.

Akhtar Faruqui FXStreet

West Texas Intermediate (WTI) Oil price extends its losing streak for the fourth successive session, trading around $57.70 per barrel during the European hours on Monday. Crude Oil prices decline as the United States (US) pushes for a Russia-Ukraine peace deal that could boost crude flows into an already well-supplied market.

Senior US and Ukrainian officials said Sunday that progress is being made on a US-backed proposal to end the conflict. US Secretary of State Marco Rubio described the talks in Geneva as “very worthwhile,” calling it the most productive day in “a very long time,” while also downplaying the Thursday deadline set by President Donald Trump for Ukraine’s response.

However, several European allies worry that the proposal tilts too far in Moscow’s favor. If a deal is reached, it could result in sanctions on Russian Oil being lifted, potentially adding more supply to a market already expected to face a substantial surplus next year.

Reuters quoted IG analyst Tony Sycamore as saying in a note that “The selloff was triggered mainly by President Trump’s forceful push for a Russia-Ukraine peace deal, which markets see as a fast track to unlocking substantial Russian supply.”

According to the report, progress toward a deal outweighed the near-term disruption caused by US sanctions on state-owned Rosneft and private producer Lukoil, which took effect Friday and has left nearly 48 million barrels of Russian crude stranded at sea.

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

Akhtar Faruqui

FXStreet

Akhtar Faruqui is a Forex Analyst based in New Delhi, India. With a keen eye for market trends and a passion for dissecting complex financial dynamics, he is dedicated to delivering accurate and insightful Forex news and analysis.

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