WTI gains ground above $67.00 amid renewed Red Sea attacks
- WTI price drifts higher to around $67.15 in Wednesday’s early Asian session.
- Simmering Red Sea conflict boosts the WTI price.
- Crude oil stockpiles in the US unexpectedly rose by 7.1 million barrels last week, said API.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $67.15 during the early Asian trading hours on Wednesday. The WTI price edges higher amid renewed Houthi attacks on shipping in the Red Sea. Oil traders await the US Energy Information Administration (EIA) Crude Oil stockpiles report, which is due later on Wednesday.
The Middle East conflict between Israel and Iran came to an end last month, when US President Donald Trump announced a truce. Nonetheless, Houthi strikes have caused disruptions in the oil and energy supply and transportation systems.
Reuters reported late Tuesday that four seafarers on the Liberian-flagged, Greek-operated bulk carrier Eternity C were killed in a drone and speedboat attack off Yemen, the second incident in a day after months of calm. The escalation in the Red Sea could boost the WTI price, as it is a key route for transporting crude oil from the Middle East to Europe and Asia.
On the other hand, a surprise gain in US inventories last week might cap the upside for the black gold. The American Petroleum Institute (API) weekly report showed crude oil stockpiles in the US for the week ending July 4 unexpectedly rose by 7.1 million barrels, compared to an increase of 680,000 barrels in the previous week. The market consensus estimated that stocks would decrease by 2.8 million barrels. So far this year, crude oil inventories are up 11 million barrels, according to Oilprice calculations of API data.
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.
