WTI Oil declines on inventory surge, Middle East tensions cap losses

WTI US Oil erases previous gains and turns negative after a strong weekly inventory increase.
Geopolitical tensions in the Middle East help limit the downside.
OPEC keeps its demand growth forecasts for 2026 and 2027 unchanged.

Ghiles Guezout FXStreet

The West Texas Intermediate (WTI) US Oil trades lower on Thursday, hovering around $64.15 at the time of writing, down 1.10% on the day. The Oil market is mainly reacting to the latest weekly US inventory data.

The Energy Information Administration (EIA) reported a build of 8.53 million barrels in US Crude Oil stocks last week, a figure well above market expectations. Total inventories stand at 428.8 million barrels, roughly 3% below the five-year average for this time of year, but the sharp weekly increase revives concerns about the short-term supply-demand balance in the United States (US).

However, WTI’s decline remains limited by ongoing tensions between the US and Iran. US President Donald Trump stated that no firm decisions were made following his meeting with Israeli Prime Minister Benjamin Netanyahu, while confirming that negotiations with Tehran will continue. He also noted that additional military deployment in the Middle East remains an option if no agreement is reached, keeping a geopolitical risk premium embedded in Oil prices.

According to a note cited by Reuters, analysts at Rystad Energy argue that a resilient US labor market underpins demand for transportation fuels, petrochemicals and power generation, thereby reducing downside risks to US Oil consumption despite a more cautious macroeconomic backdrop.

On the global supply side, the Organization of the Petroleum Exporting Countries (OPEC) left its demand growth forecasts for 2026 and 2027 unchanged at 1.38 million and 1.34 million barrels per day, respectively, while maintaining its outlook for non-OPEC supply. Investors now turn their attention to the upcoming monthly report from the International Energy Agency (IEA), which could once again flag the risk of a global surplus, a factor that may weigh further on WTI should this scenario materialize.

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

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.

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