WTI rebounds on Russian depot strike, US sanctions despite oversupply fears
- WTI rises toward $60, driven by the destruction of a Russian Oil depot in Novorossiysk.
- Supply risks intensify ahead of new US sanctions targeting Russia.
- Forecasts of a significantly oversupplied market in 2025 and 2026 continue to limit Oil’s rebound.
West Texas Intermediate (WTI) US Oil trades around $59.50 on Friday at the time of writing, up 1.60% on the day, after hitting a daily high at $60.47. The Crude Oil recovers after a Ukrainian drone strike damaged an Oil depot at Russia’s Black Sea port of Novorossiysk, one of the country’s key export hubs. According to regional authorities cited by Reuters, debris from the strike hit a trans-shipment facility and several coast-side structures, immediately stoking fears of supply disruptions.
Oil prices are also gaining support from risks surrounding upcoming United States (US) sanctions targeting Russian Oil flows, which come into force on November 21. Lukoil, one of Russia’s largest private producers, has reportedly begun reducing staff across its global trading units, a sign that market participants are preparing for reduced operational flexibility.
Analysts warn that a significant portion of Russia’s seaborne Crude exports could become stranded, as rerouting is hampered by India and China recently halting their Russian crude purchases.
However, this geopolitical boost collides with much heavier fundamental pressures. The International Energy Agency (IEA) expects a surplus of over 2.4 million barrels per day in 2025 and more than 4 million in 2026, even as global demand continues to grow. These projections align with those from the Organization of the Petroleum Exporting Countries and its allies (OPEC+), which has been increasing output since April and anticipates another modest market surplus next year.
In the United States, the Energy Information Administration (EIA) reported a much larger-than-expected increase in Crude Oil inventories this week, reinforcing concerns about an already oversupplied market. These rising stockpiles come as US Oil production approaches record levels, adding structural downward pressure on prices.
Against this backdrop, WTI manages to rebound primarily on geopolitical risk, but the move remains constrained by fundamentals that still point to persistent weakness. Traders will now watch for developments on US sanctions, Russian supply flows, and upcoming monthly reports from the IEA and OPEC+, which will be key to assessing whether the recent recovery in Oil prices can last.
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.
