WTI trades with positive bias above mid-$57.00s; upside potential seems limited
- WTI kicks off the new week on a positive note and snaps a two-day losing streak.
- Escalating US-Venezuela tensions fuel supply disruption fears and offer support.
- Oversupply concerns and Russia-Ukraine peace deal optimism cap the commodity.
West Texas Intermediate (WTI) US Crude Oil prices attract some buying during the Asian session on Monday and for now, seem to have snapped a two-day losing streak. The commodity is currently trading just above mid-$57.00s, up 0.45% for the day, though the mixed fundamental backdrop warrants caution before positioning for any meaningful recovery from its lowest level since October 21, touched last Thursday.
Tensions between the US and Venezuela escalated further last week after President Donald Trump announced that the US Coast Guard seized an oil tanker on the coast of Venezuela. This, in turn, fuels concerns about potential disruptions from Venezuela and acts as a tailwind for Crude Oil prices. Apart from this, the underlying bearish sentiment surrounding the US Dollar (USD) is seen as another factor lending some support to the commodity.
Despite the US Federal Reserve's (Fed) caution about further policy easing, traders are still pricing in the possibility of two more rate cuts in 2026. This, in turn, fails to assist the Greenback to register any meaningful recovery from a two-month low, which, in turn, acts as a tailwind for the USD-denominated commodities, including Oil prices. The upside, however, seems capped amid lingering oversupply worries and a potential Russia-Ukraine peace deal.
In the latest geopolitical development, Ukrainian President Volodymyr Zelenskiy held five hours of talks with US envoys on Sunday and offered to drop his country's aspiration to join the NATO military alliance. Moreover, US envoy Steve Witkoff said that a lot of progress was made, though he did not provide additional details. Negotiations are set to continue on Monday, though the optimism might continue to act as a headwind for Crude Oil prices.
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
Haresh Menghani
FXStreet
Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.
