WTI recovers above $63.00 as Russia shrugs off US deadline to avoid sanctions

WTI price rebounds to near $63.35 in Tuesday’s early Asian session.
Trump and Putin will meet on Friday in Alaska to negotiate an end to the war in Ukraine.
Concerns over deflationary pressure in China might cap the upside for WTI.

Lallalit Srijandorn FXStreet

West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $63.35 during the early Asian trading hours on Tuesday. The WTI recovers some lost ground as Russia ignores the US deadline to end its war with Ukraine. Oil traders brace for the American Petroleum Institute (API) Crude Oil stockpiles report later on Tuesday. A potential meeting between the US and Russia in Alaska will be closely watched on Friday.

US President Donald Trump threatened Russia to end its war with Ukraine or face heavy tariffs on its oil exports, as well as secondary sanctions on countries purchasing oil from Russia. The deadline expired last Friday, and Russia did not respond to the sanction threats.

However, Trump said last week that he would meet Russian President Vladimir Putin in Alaska on Friday to discuss the Ukraine issue. In the absence of further developments between the US and Russia, talks could raise the prospect of tighter penalties on Moscow, which might lift the WTI price in the near term.

On the other hand, data from the National Bureau of Statistics (NBS) on Saturday showed China’s Producer Price Index (PPI) fell more than expected in July. This report suggested the impact of sluggish domestic demand and ongoing trade uncertainty on consumer sentiment. The concerns over persistent deflation in China could weigh on the WTI price as China is the world's second-largest consumer of oil and gas.

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

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.

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