WTI hovers around $68.50 near two-month lows amid prospects of increased supply

WTI price stays subdued amid rising supply expectations and a weakening demand outlook.
Oil prices remain under pressure amid the possibility of a Russia-Ukraine peace deal and the potential easing of Russian sanctions.
President Trump announced plans to revoke Chevron Corp.’s Oil license in Venezuela.

Akhtar Faruqui FXStreet

West Texas Intermediate (WTI) oil price remains near a two-month low at $68.29 recorded on February 26, hovering around $68.70 per barrel during Asian trading hours on Thursday. Crude oil prices continue to face pressure from expectations of increased supply and a bearish demand outlook.

The possibility of a Russia-Ukraine peace deal has also weighed on prices, as the potential easing of Russian sanctions could lead to a higher global Oil supply. Additionally, concerns over economic growth have added to the headwinds, with fears that tariffs imposed by US President Donald Trump on China and other trading partners could weaken demand.

In a related development, the United States (US) and Ukraine have reportedly agreed on the terms of a draft minerals deal crucial to Kyiv’s efforts to secure Washington’s support. According to sources cited by Reuters on Tuesday, President Donald Trump is seeking to swiftly end the conflict with Russia.

On Wednesday, President Trump announced plans to revoke Chevron Corp.’s Oil license in Venezuela. Venezuelan Vice President Delcy Rodriguez criticized the decision, calling it "damaging and inexplicable," as reported by Reuters.

In Iraq, the Kurdistan regional government has reached an agreement with the federal Oil ministry to resume Kurdish crude exports based on available volumes. However, the restart is pending Turkey’s approval. The pipeline has been shut since March 2023, following an International Chamber of Commerce (ICC) ruling ordering Turkey to pay Baghdad $1.5 billion in damages for unauthorized exports between 2014 and 2018.

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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