WTI hovers around $60.50 due to oversupply concerns
- WTI steadies as the IEA reiterated that global supply will significantly exceed demand this year.
- Crude prices may further rise as easing tensions reduce demand risks after Trump signaled pausing tariffs on Europe over Greenland.
- Oil gained support from tighter supply optimism after temporary shutdowns at Kazakhstan’s Tengiz and Korolev fields.
West Texas Intermediate (WTI) Oil price moves little after four days of gains, trading around $60.60 per barrel during the Asian hours on Thursday. The upside of the Oil prices is capped as supply risks are offset by oversupply concerns, with the International Energy Agency (IEA) reiterating that global supply will significantly exceed demand this year despite a modest upgrade to demand growth. Industry data also showed the United States (US) crude inventories rose by about 3 million barrels last week.
However, Crude Oil prices gained ground as easing geopolitical tensions helped lower downside risks to energy demand. US President Donald Trump said on Wednesday that he would step back from imposing tariffs on goods from European nations opposing his effort to take possession of Greenland.
President Trump also said that the United States and the North Atlantic Treaty Organization (NATO) had “formed the framework of a future deal regarding Greenland.” However, he did not outline the parameters of the so-called framework, and it remained unclear what the agreement would entail, according to a Bloomberg report.
Oil prices also found support from optimism over tighter supply after a temporary seven-to-10-day shutdown at Kazakhstan’s Tengiz and Korolev oilfields. Reuters reported that Tengiz operator TCO declared force majeure on crude deliveries into the CPC pipeline system.
Meanwhile, Venezuelan Oil exports under a flagship $2 billion supply deal with the US reached about 7.8 million barrels on Wednesday, according to vessel-tracking data and PDVSA documents cited by Reuters, underscoring slow progress that has prevented the state-run producer from fully reversing recent output cuts.
Valero Energy has purchased a shipment of Venezuelan crude, marking the first deal by a US Gulf Coast refiner under Washington’s agreement with Caracas to import up to 50 million barrels of Oil, sources said.
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
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.
