WTI holds gains above $69.00 on a weaker US Dollar

WTI price rebounds to near $69.10 in Friday’s early European session.
A softer US Dollar following the downbeat NFP data underpins the USD-denominated oil price.
Traders will monitor US-Iran negotiations after Trump said he believed Iran had "agreed to just about everything we need.”

Lallalit Srijandorn FXStreet

West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $69.10 during the early European trading hours on Friday. The WTI price recovers some lost ground on a weaker US Dollar (USD) ahead of a long holiday weekend in the United States (US).

The latest US employment data suggested a cooling labor market and prompted financial markets to dial back expectations for a near-term interest rate hike from the US Federal Reserve (Fed). This, in turn, weighs on the US Dollar (USD) and provides some support to the USD-denominated commodity price.

The US Nonfarm Payrolls (NFP) rose by 57,000 in June, falling short of expectations of 110,000, the US Bureau of Labor Statistics (BLS) showed on Thursday. The Unemployment Rate fell to 4.2% during the same period, down from 4.3% in May.

However, wary optimism holds over efforts to secure peace in the Middle East between the US and Iran. Reuters reported that the US and Iran concluded a round of indirect talks on Wednesday with no sign that they had made headway toward lasting peace. Any signs of renewed tensions in the Middle East could boost the WTI price.

Iran’s joint military command warned that any US interference in the Strait of Hormuz will be met with a “decisive and swift response” as tensions continue to roil negotiations.

US President Donald Trump said on Thursday that “I think they have accepted nearly everything we require.” His remarks came as Qatar reported “positive progress” after Washington and Tehran concluded indirect technical talks in Doha on issues related to the Memorandum of Understanding (MoU) signed on June 17.

“It's a case of guarded optimism, with the market wanting to believe the peace efforts will hold, but it’s still hedging its bets until it sees real evidence on the water,” said Tim Waterer, chief market analyst at KCM Trade.

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.

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