WTI rises to near $62.00 on Russia supply concerns
- WTI price gains traction near $61.90 in Thursday’s early European session.
- Geopolitical risks and stricter sanctions on Russian crude support the WTI price.
- The EIA revealed an increase in crude oil stocks by 1.79 million barrels last week.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $61.90 during the Asian trading hours on Thursday. The WTI drifts higher, snapping the three-day losing streak amid prospects of tougher sanctions on Russian crude.
Escalating geopolitical tensions and talk of stricter sanctions on Russian crude provide some support to the WTI price. The US will provide Ukraine with intelligence to support long-range missile strikes on Russian energy infrastructure, the Wall Street Journal (WSJ) reported on Wednesday. US President Donald Trump approved the move, and US officials are urging NATO allies to do the same.
G7 Finance Ministers on Wednesday pledged to intensify pressure on Russia by targeting countries expanding their purchases of Russian oil as well as entities helping to bypass restrictions.
Nonetheless, the potential upside for the WTI price might be limited due to expectations of increased supply from the Organization of the Petroleum Exporting Countries and allies (OPEC+) production hike scheduled for next month. Traders expect the OPEC+ to boost production in November, triple the increase made for October, as Saudi Arabia seeks to reclaim market share, three sources familiar with the talks said.
A bigger-than-expected increase in US crude inventories last week might also weigh on the black gold. Data released by the US Energy Information Administration (EIA) on Wednesday revealed that crude oil stockpiles in the US for the week ending September 26 rose by 1.792 million barrels, compared to a decline of 607,000 barrels in the previous week. Analysts forecast that stocks would increase by 1.5 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.
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.
