WTI jumps above $57.50 as US intercepts Venezuelan tanker

WTI price climbs to near $57.65 in Monday’s early European session, up 1.12% on the day.
Officials said the US had intercepted an oil tanker in international waters off the coast of Venezuela.
Fed rate cut bets might help limit the WTI’s losses.

Lallalit Srijandorn FXStreet

West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $57.65 during the early European trading hours on Monday. The WTI price rises after US President Donald Trump said that he will not rule out war with Venezuela, raising fresh supply uncertainty. Traders brace for the release of the American Petroleum Institute (API) crude oil stockpiles report on Tuesday for fresh impetus.

NBC reported on Sunday that the US is still in pursuit of a third oil tanker near Venezuela as Trump intensifies an oil blockade on Nicolás Maduro’s government. Another official affirmed that the tanker was under sanctions but reiterated that it had not yet been boarded and that interceptions may take several forms, including sailing or flying near vessels of concern.

"The market is waking up to the fact that the Trump administration is taking a hardline approach to the Venezuelan oil trade," said June Goh, senior oil market analyst at Sparta Commodities.

On the other hand, the growing expectation that the US Federal Reserve (Fed) will deliver further interest rate cuts after signs of softer US inflation and cooler jobs reports could weigh on the US Dollar (USD) and boost the USD-denominated commodity price.

Financial markets are pricing in nearly a 21.0% odds the Fed will cut interest rates at its next meeting in January, after it reduced them by a quarter-point at each of its last three meetings, according to the CME FedWatch tool.

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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