WTI recovers to above $64.00, potential US-Russia talks in focus

WTI price rebounds to around $64.10 in Thursday’s early European session.
US crude stockpiles fell by 3.029 million barrels to 423.7 million in the week ending August 1.
Potential US-Russia talks have tempered concerns about supply disruptions.

Lallalit Srijandorn FXStreet

West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $64.10 during the early Asian trading hours on Thursday. The WTI edges higher after a five-day drop on a bigger-than-expected draw in US crude inventories last week and lingering concerns over the economic fallout from US tariff measures. Oil traders will closely monitor the prospect of the US. -Russian talks.

A decline in US crude oil inventories last week suggests demand remains firm and provides some support to the WTI price. The US Energy Information Administration (EIA) Crude Oil Stockpiles report showed crude oil stockpiles in the US for the week ending August 1 fell by 3.029 million barrels, compared to a rise of 7.698 million barrels in the previous week. The market consensus estimated that stocks would decrease by 1.1 million barrels.

On Wednesday, US President Donald Trump doubled tariffs on Indian goods due to the nation’s Russian energy purchases. The new import tax will go into effect 21 days after August 7. Trump also stated that further tariffs on China, similar to the 25% duties announced earlier on India, were possible.

"Tariffs are likely to harm the global economy, which will ultimately affect fuel demand," said Phillip Nova's senior market analyst, Priyanka Sachdeva, adding that markets are overlooking the fact that their impact will still be much greater on the US economy and inflation.

A White House official said on Wednesday that Trump could potentially meet with Russian President Vladimir Putin as early as next week. Trump said there was a "very good chance" he would meet soon with Putin and Ukrainian President Volodymyr Zelenskiy. Potential US-Russia talks regarding the Ukraine conflict have tempered concerns about supply disruptions, which might cap the WTI’s upside.

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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