WTI holds steady above $64.00 amid inventory buildup, geopolitical uncertainty

WTI price trades flat near $64.20 in Wednesday’s Asian session.
Trump threatened Iran if the US demands are not met.
US crude oil inventories surged the most since January 2023.

Lallalit Srijandorn FXStreet

West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $64.20 during the Asian trading hours on Wednesday. The WTI price holds steady as lingering geopolitical uncertainty offsets a significant build in US crude oil inventory. Traders brace for the release of the Energy Information Administration (EIA), which will be released later on Wednesday.

US President Donald Trump continued to threaten Iran with possible military attacks if Tehran does not accede to his demands on issues ranging from nuclear enrichment to ballistic missiles. The remarks came as Iran’s security chief, Ali Larijani, met with the sultan of Oman, Haitham bin Tariq Al Said, to discuss the results of talks between US and Iranian officials last week.

Traders will closely monitor the developments surrounding diplomatic relations between the US and Iran. Any signs of escalating tensions between the two countries could boost the black gold in the near term.

On the other hand, US crude oil inventories rose last week, which raises fears of oversupply and could drag the WTI price lower. According to the American Petroleum Institute (API) weekly report, crude oil stockpiles in the US for the week ending February 6 climbed by 13.4 million barrels, compared to a fall of 11.1 million barrels in the previous week.

The EIA 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.

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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