WTI rises as geopolitical tensions overshadow bearish US EIA data
- WTI advances to $63.50, hitting a fresh weekly high as traders shift focus from bearish EIA data to escalating geopolitical risks.
- EIA data showed US Crude inventories unexpectedly rose by 3.9 million barrels last week, against expectations for a 1.1M draw, following a 2.4M build the previous week.
- Poland reported Russian drones violated its airspace, prompting NATO consultations under Article IV and fueling fears of a broader confrontation
West Texas Intermediate (WTI) Crude Oil surges on Wednesday, extending its winning streak for a third straight day as geopolitical tensions outweighed bearish US inventory data. At the time of writing, WTI is trading near $63.50 per barrel, up about 1.60% on the day after setting a fresh weekly high.
The latest US Energy Information Administration (EIA) report showed a surprise 3.9 million-barrel build in crude stocks for the week ending September 5, alongside increases of 1.5 million barrels in gasoline and 4.7 million barrels in distillates. The data briefly pressured Oil prices, reinforcing concerns that rising supply is outpacing demand. However, the downside proved short-lived as traders quickly shifted focus back to geopolitics.
Earlier on Wednesday, tensions escalated in Eastern Europe after Poland reported that Russian drones violated its airspace. Prime Minister Donald Tusk described the incident as an “act of aggression” and confirmed that Warsaw would invoke Article 4 of the NATO treaty, calling for urgent consultations with allies. The breach marked one of the most serious cross-border incidents since the Ukraine war began, underscoring the risk of a wider confrontation.
US President Donald Trump weighed in on the situation via Truth Social, posting: “What’s with Russia violating Poland’s airspace with drones? Here we go!” A White House official confirmed earlier on Wednesday that Trump and the administration are closely tracking the reports, and that the US President is expected to speak with Polish President Andrzej Nawrocki later today. The remarks have amplified market anxiety that the conflict could escalate and draw NATO into a more direct standoff with Moscow.
Speculation is also growing that Trump may soon target Russian energy exports as part of a broader push to pressure Moscow. On Tuesday, the President urged the European Union (EU) to impose tariffs of up to 100% on imports from China and India, both major buyers of Russian oil, in an effort to weaken Russia’s war economy.
Meanwhile, Middle East tensions also remain elevated after an Israeli strike in Qatar targeting Hamas leadership. The dual front of geopolitical risks in Eastern Europe and the Gulf is adding a risk premium in energy markets and helping WTI recover lost ground after last week’s sharp sell-off.
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
Vishal Chaturvedi
FXStreet
I am a macro-focused research analyst with over four years of experience covering forex and commodities market. I enjoy breaking down complex economic trends and turning them into clear, actionable insights that help traders stay ahead of the curve.
