WTI tumbles below $63.00 as traders await Trump-Putin talk outcomes
- WTI price drifts lower to near $62.85 in Friday’s early European session.
- Trump warned Russia of “consequences” if it did not reach a Ukraine peace deal.
- Optimism surrounding the expectation of a US interest rate cut next month could boost oil demand, supporting the WTI price.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $62.85 during the early European trading hours on Friday. The WTI loses ground as traders brace for a face-to-face summit between US President Donald Trump and Russian President Vladimir Putin in Alaska on Friday, which could result in significant changes to supply from Russia.
Trump and Putin are set to meet in Alaska to discuss the Ukraine issue. On Wednesday, Trump warned that Russia will face “very severe consequences” if Putin doesn’t agree to end the war in Ukraine during their meeting on Friday. Any signs of ongoing conflict between Russia and Ukraine could support the WTI price, while a positive outcome could drag the black gold lower.
“A direct ceasefire is unlikely, but there may be outcomes for US-Russia cooperation and a framework for follow-up negotiations, which is bearish for oil prices,” said Zhou Mi, an analyst at a research institute affiliated with Chaos Ternary Futures Co.
On the other hand, rising bets that the US Federal Reserve (Fed) will cut rates at the September meeting could undermine the US Dollar (USD) and boost the USD-denominated commodity prices. Oil traders will keep an eye on the US July Retail Sales report due later on Friday for fresh impetus. According to the CME FedWatch tool, Fed funds futures traders are now pricing in nearly a 94% possibility of a 25 basis point (bps) cut next month, up from an 85% chance last week.
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.
