WTI gains momentum above $63.50 as hopes for Russia-Ukraine peace deal fade
- WTI price gains traction to near $63.40 in Monday’s Asian session.
- Waning prospects for an immediate Russia-Ukraine peace deal boost the WTI price.
- Oil traders will focus on the API weekly crude oil stock report later on Tuesday.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $63.40 during the early Asian trading hours on Friday. The WTI edges higher after Ukraine drone attacks target Russian energy infrastructure. Traders brace for the release of the American Petroleum Institute (API) weekly crude oil stock, which is due later on Tuesday.
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. "Given the success that Ukraine is having with its targeting of Russian oil infrastructure ... the risks for crude oil are shifting to the topside," IG market analyst Tony Sycamore said.
The US Federal Reserve (Fed) Chair Jerome Powell appears to be laying the groundwork for a potential rate reduction in the September meeting. The Fed’s dovish tone could drag the US Dollar (USD) lower and support the USD-denominated commodity price.
Oil traders will closely monitor the developments surrounding the resolution between Russia and Ukraine. Any signs of progress in negotiations might ease supply concerns and cap the upside for the black gold, while the prospect of sanctions on Russian crude being lifted could boost the WTI price.
Russian Foreign Minister Sergey Lavrov stated on Sunday that Russian President Vladimir Putin “is ready to meet” with Zelenskyy when the agenda is ready for a summit. But he said that no meeting is currently planned.
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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