WTI tumbles to near $62.00 on oversupply concerns
- WTI price extends the decline to near $62.15 in Thursday’s early Asian session.
- Bearish EIA inventory report and IEA oil surplus forecast weigh on the WTI price.
- Traders will closely watch the upcoming Trump-Putin meeting later on Friday.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $62.15 during the early Asian trading hours on Wednesday. The WTI declines to nearly a two-month low due to an unexpected increase in US crude oil supplies and a bearish oil surplus forecast by the International Energy Agency (IEA).
US crude oil inventories unexpectedly rose last week, signaling weaker demand and undermining the WTI price. According to the Energy Information Administration, crude oil stockpiles in the US for the week ending August 8 climbed by 3.036 million barrels, compared to a fall of 3.029 million barrels in the previous week. The market consensus estimated that stocks would decrease by 800,000 barrels.
Furthermore, the concerns about oversupply in the oil market this year also weigh on the black gold. The International Energy Agency projected oversupply in the market this year due to surging supply from the Organization of the Petroleum Exporting Countries and its allies (OPEC+) and non-OPEC+ producers. The IEA on Wednesday released a report forecasting a record global oil surplus of 2.96 million bpd in 2026 due to tepid demand and increased supply.
Oil traders will closely monitor the upcoming meeting between US President Donald Trump and Russian President Vladimir Putin in Alaska on Friday to discuss the Ukraine issue. Late 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. In the absence of further developments between the US and Russia talks could raise the prospect of tighter penalties on Moscow, which might help limit the WTI’s losses in the near term.
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.
