WTI price steadies above $60.50 as geopolitical relief offsets oversupply concerns
- WTI price steadies near $60.60 in Thursday’s early European session.
- Easing geopolitical tensions after Trump stepped back from tariff threats against European nations supports the WTI price.
- IEA maintained its bearish outlook for the oil market, projecting that supply will significantly exceed demand this year.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $60.60 during the early European trading hours on Thursday. The WTI price holds steady amid cooling geopolitical tensions over Greenland and oversupply concerns.
US President Donald Trump said on Wednesday that he would hold back from imposing tariffs on Europe over Greenland, saying the framework of a potential deal had been reached. His comments at the World Economic Forum in Davos helped revive global risk appetite, as investors took them as a sign of easing geopolitical and trade tensions. This, in turn, could provide some support to the WTI price in the near term.
Additionally, signals of supply disruptions in Kazakhstan might contribute to the WTI’s upside. Kazakh oil producer Tengizchevroil, led by Chevron, said that it had temporarily halted production at the Tengiz and Korolev oilfields after two fires at power generators, per Bloomberg.
On the other hand, oversupply concerns might weigh on the black gold. The International Energy Agency (IEA) reiterated its forecast that global oil supply will significantly exceed demand this year. US crude inventories also reportedly rose last week by about 3 million barrels.
“We saw some interest in buying Brent and WTI crude following Trump’s Davos speech and social-media posts,” said Chris Weston, head of research at Pepperstone Group. Still, “there is little conviction to chase the move aggressively. The supply backdrop continues to act as an overhang, limiting upside follow-through,” he added.
(This story was corrected on January 22 at 07:15 GMT to say, in the second paragraph, that Trump said he wouldn't impose tariffs on certain European countries after reaching a deal over Greenland, not the Greenback.)
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.
