WTI slips toward $58.00 as rising global inventories fuel oversupply concerns
- WTI prices weaken amid rising global inventories and oversupply concerns.
- Chevron, Vitol, and Trafigura compete for US deals to export up to 50 million barrels of Venezuelan crude.
- Crude Oil prices may gain ground as geopolitical tensions persist and future supply flows remain uncertain.
West Texas Intermediate (WTI) Oil price loses ground after registering over 4% gains in the previous session, trading around $58.10 per barrel during the Asian hours on Friday. Oil prices depreciate amid rising global inventories and oversupply.
Oil major Chevron, global trading houses Vitol and Trafigura, and other firms are competing for United States (US) government deals to export Venezuelan crude, vying to market up to 50 million barrels of PDVSA’s accumulated inventories amid ongoing negotiations on Venezuelan Oil exports.
Crude Oil prices could further gain amid concerns about potential supply disruptions from Venezuela and Iran, as geopolitical tensions persist and markets weigh uncertainty over future flows. US President Donald Trump said the United States would react strongly to any lethal crackdown on protesters in Iran, while traders monitor developments involving US policy toward Venezuela and heightened rhetoric surrounding Greenland.
US Senator Lindsey Graham said he met President Trump at the White House on Wednesday, where Trump approved moving forward with a long-pending Russia sanctions bill. Graham said the legislation would give the President authority to penalize countries purchasing discounted Russian Oil that supports Moscow’s war effort, naming China, India, and Brazil as possible targets.
Meanwhile, US actions in Venezuela drew attention after Washington seized two Oil tankers linked to the country in the Atlantic, including one sailing under a Russian flag, underscoring intensified efforts to tighten control over energy flows and enforce sanctions, according to Reuters.
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
Akhtar Faruqui
FXStreet
Akhtar Faruqui is a Forex Analyst based in New Delhi, India. With a keen eye for market trends and a passion for dissecting complex financial dynamics, he is dedicated to delivering accurate and insightful Forex news and analysis.
