WTI rebounds above $62.50 as US crude inventories fall more than expected
- WTI price recovers to near $62.80 in Thursday’s early Asian session.
- US crude inventories fell 6.014 million barrels last week, EIA noted.
- Trump said the US may provide air support to back a Ukraine deal.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $62.80 during the early Asian trading hours on Thursday. The WTI edges higher as US crude oil inventories fall more than expected. Traders brace for progress in talks to end the Ukraine war, with sanctions on Russian crude remaining in place for now.
The US Energy Information Administration (EIA) showed a fall in crude stocks more than expected last week. This report indicated a stronger demand and lifted the WTI price. According to the EIA weekly report, crude oil stockpiles in the US for the week ending August 15 fell 6.014 million barrels, compared to a rise of 3.036 million barrels in the previous week. The market consensus estimated that stocks would decrease by 1.3 million barrels.
US President Donald Trump said on Tuesday that he had ruled out putting US troops on the ground in Ukraine, but said the country might provide air support as part of a deal to end Russia's war in the country. On Wednesday, Russia warned the West that efforts to handle security issues in Ukraine without Moscow's involvement were a "road to nowhere," as it scrambles to work out guarantees for Kyiv's future protection.
Oil traders will closely monitor the developments surrounding the prospect of peace in Ukraine. Optimism that an agreement to end the Russia-Ukraine war seemed closer might cap the upside for the WTI price. However, any signs of escalating tensions could boost the black gold in the near term.
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.
