WTI slips toward $63.00 as IEA upgrades Oil supply growth forecast
- WTI depreciated due to weakening Oil demand in the United States.
- The International Energy Agency raised its forecast for global Oil supply growth in 2025.
- Oil prices could rebound after Russia breaches Polish airspace and an Israeli strike on Hamas leaders in Doha.
West Texas Intermediate (WTI) Oil price edges lower after three days of losses, trading around $63.10 per barrel during the European hours on Thursday. Crude Oil prices are subdued amid weakening United States (US) demand.
The US Energy Information Administration (EIA) reported on Wednesday that crude inventories rose by 3.9 million barrels in the previous week, against the market expectations for a draw of 1.1 million barrels, pointing to softer consumption.
On Thursday, the International Energy Agency (IEA) revised its forecast for global Oil supply growth in 2025, reflecting the decision to boost production by the Organization of the Petroleum Exporting Countries and its allies, commonly known as OPEC+. The agency also upgraded its demand outlook by 737,000 barrels per day (bpd) from 685,000 bpd.
The IEA said in its monthly oil market report, "Oil markets are being pulled in different directions by a range of forces, with the potential for supply losses stemming from new sanctions on Russia and Iran coming against a backdrop of higher OPEC+ supply and the prospect of increasingly bloated oil balances."
Oil prices could rebound amid prevailing geopolitical risks. Traders await further comments from US President Donald Trump after he questioned Russia’s alleged breach of Polish airspace, fueling expectations of stricter US energy sanctions. Trump also pressed the European Union (EU) to levy tariffs on China and India to push Moscow toward talks. Risk premiums rose further after Israel claimed to have targeted Hamas leaders in Doha, though no immediate threats to Oil infrastructure were reported.
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.
