WTI price recovers above $62.50 as traders brace for Trump-Zelenskiy meeting
- WTI price rebounds to around $62.55 in Tuesday’s early Asian session.
- Trump said he had spoken to Putin to begin making plans for a summit with Ukraine’s Zelenskiy.
- Reduced Fed rate cut expectations might cap the upside for the WTI price.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $62.55 during the early Asian trading hours on Tuesday. The WTI edges higher after talks between US President Donald Trump and his Ukrainian counterpart in the wake of an inconclusive US-Russia summit in Alaska on Friday. Traders await the release of the American Petroleum Institute (API) weekly Crude Oil Stock, which is due later on Tuesday.
On Monday, Trump and Ukrainian President Volodymyr Zelenskiy met at the White House to discuss a path to ending Russia's war in Ukraine. US President said that the US would "help out" Europe in providing security for Ukraine as part of any deal to end the war in Ukraine and expressed hope that Monday's summit could eventually lead to a trilateral meeting with Russian President Vladimir Putin.
Trump further stated that negotiations to obtain peace in the years-long war prompted by Russia’s invasion of Ukraine can take place while both countries are still fighting, dropping his earlier calls for a ceasefire. Meanwhile, Ukraine stepped up attacks on Russia's energy infrastructure. Its drones struck in Russia's Tambov region, leading to the suspension of supplies, per Reuters. This, in turn, provides some support to the WTI price.
On the other hand, traders pared bets on a rate cut at the US Federal Reserve (Fed) at the September 16-17 meeting after Producer Price Index (PPI) inflation was hotter than expected in July. This could provide some support to the US Dollar (USD) and undermine the USD-denominated commodity price. Fed fund futures traders are now pricing in an 83% chance of a September rate cut, after last week briefly fully pricing in a move, according to the CME FedWatch tool. Traders will closely monitor the Fed's Jackson Hole symposium later on Friday for rate clues.
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
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.
