- WTI price tumbles to near $64.60 in Tuesday’s early European session.
- Oil traders will closely monitor further developments in the Russia-Ukraine conflict.
- Prospects of a Fed rate cut next month might underpin the WTI price.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $64.60 during the early Asian trading hours on Tuesday. The WTI edges lower as traders assess the prospects of additional US tariffs on Russia. Oil traders brace for the American Petroleum Institute (API) weekly crude oil stock report, which is due later on Tuesday.
Last week, US President Donald Trump threatened to impose additional sanctions on Russia if no progress is made in peace talks with Ukraine within two weeks. Uncertainty about stalled peace negotiations, along with Trump's threat of more sanctions on Russia and higher tariffs on Indian imports, exacerbates supply fears and weighs on the WTI price.
Nonetheless, rising tensions between Russia and Ukraine could lift the black gold. Earlier this week, the WTI price received support from concerns about supply disruptions following Ukraine’s strikes on Russian energy infrastructure. Russian officials said that Ukraine carried out a drone attack on Russia on Sunday, causing a significant fall in reactor capacity at one of the country's largest nuclear power facilities and a massive fire at the Ust-Luga fuel export terminal.
Additionally, the US Federal Reserve (Fed) Chair Jerome Powell on Friday signaled a possible interest rate cut at the September meeting, saying that risks to the job market were rising but also noting inflation remained a threat and that a decision wasn't set in stone. A dovish tone from the Fed officials might weigh on the US Dollar (USD) and underpin the USD-denominated commodity price.
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.
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