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WTI retreats below $92.50 on US-Iran ceasefire optimism despite ongoing strikes

  • WTI price falls to near $92.45 in Friday’s early European session.
  • The US believes it's close to an agreement with Iran to end the war.  
  • Trump said the ceasefire remains in place despite the strikes. 

West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $92.45 during the early European trading hours on Friday. The WTI price attracts some sellers on optimism over a possible deal to end the war with Iran. 

The US President Donald Trump administration has been waiting for Iran to respond to its proposal to reopen the Strait of Hormuz and end the war. Meanwhile, Iran’s leaders haven't indicated whether they’ll accept the terms of the deal, though they’ve previously shown little sign of yielding on their nuclear program and accepting a moratorium on enriching uranium. Hopes of a "one-page deal" to end the two-month conflict could boost hopes of improved supply flows, weighing on the WTI price. 

However, uncertainty in the Middle East remains high as the US and Iran exchanged fire late on Thursday. The Guardian reported that Iran accused the US of violating the ceasefire by targeting two ships at the Strait of Hormuz and attacking civilian areas, as Washington insisted it struck in retaliation. Trump said the ceasefire remains in place despite the strikes.

Crude oil stockpiles in the US declined by 2.314 million barrels during the week ending May 1, compared to a fall of 6.233 million barrels in the previous week, according to the Energy Information Administration's (EIA) weekly report. The market consensus was for a decrease of 2.8  million barrels.

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.

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Lallalit Srijandorn

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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