WTI Oil declines amid US Dollar strength, OPEC+ stability
- US Oil prices retreat toward $59.20 on Tuesday, pressured by renewed demand for the US Dollar.
- Geopolitical risks and OPEC+ policy decisions continue to limit the downside.
- Markets await API inventory data while highly dovish Fed expectations support cyclical Commodities.
West Texas Intermediate (WTI) US Oil trades around $59.20 on Tuesday at the time of writing, down 0.20% on the day. The commodity remains under pressure amid a firmer US Dollar (USD), while investors await the release of the American Petroleum Institute’s (API) weekly inventory report later in the day.
Market participants remain focused on geopolitical developments that could help stabilize prices. Recent Ukrainian attacks on Russian energy infrastructure forced the suspension of operations at the Novorossiysk terminal, disrupting flows from the Caspian Pipeline Consortium (CPC). This temporary reduction in supply helps limit downward pressure, especially as the Organization of the Petroleum Exporting Countries and its allies (OPEC+) confirmed plans to keep production levels unchanged in the first quarter of 2026. This pause, following several months of output increases totaling nearly 2.9 million barrels per day since April 2025, aims to mitigate the risk of oversupply.
Meanwhile, Washington is attempting to foster a lasting de-escalation between Russia and Ukraine, suggesting that a peace agreement could involve easing sanctions on Moscow. A scenario that could eventually increase global Oil supply. OPEC+ has also approved a new mechanism to reassess member states’ maximum sustainable production capacity starting in 2027, a move that could spark internal tensions over future quotas, according to Reuters.
These supply disruptions add to broader risks, including Kazakhstan’s decision to begin redirecting part of its Oil shipments amid CPC interruptions. Rising tensions between the United States (US) and Venezuela introduce another potential supply threat. The White House is considering restricting Venezuelan airspace, a move that could affect roughly 800,000 barrels per day of Crude Oil, most of which is exported to China.
On the macroeconomic front, strongly dovish expectations surrounding the Federal Reserve (Fed) continue to indirectly support Oil prices. Lower interest rates would improve financial conditions, stimulate economic activity, and boost energy demand. According to the CME FedWatch tool, markets now assign an 87% chance to a 25-basis-point rate cut in December, lending support to cyclical Commodities such as Oil.
In this environment of geopolitical tension, potential supply tightening, and growing expectations of monetary easing, WTI continues to trade near $59.20, as investors assess the likelihood of a more pronounced rebalancing of the Oil market over the coming months.
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
Ghiles Guezout
FXStreet
Ghiles Guezout is a Market Analyst with a strong background in stock market investments, trading, and cryptocurrencies. He combines fundamental and technical analysis skills to identify market opportunities.
