WTI edges higher above $62.50 on US winter storm supply disruptions
- WTI price attracts some buyers to near $62.65 in Wednesday’s Asian session.
- Supply disruptions from the US winter storm and geopolitical risks could boost the WTI price.
- Traders will take more cues from the EIA crude oil stockpiles report later on Wednesday.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $62.65 during the Asian trading hours on Wednesday. The WTI price edges higher amid concerns over US production losses brought on by the winter storm. Traders await the release of the Energy Information Administration (EIA) crude oil stockpiles report later on Wednesday.
Analysts estimated the severe winter storm that has swept across the US knocked out an estimated 2 million barrels per day, or roughly 15% of national output over the weekend, and exports of crude oil and liquefied natural gas from US Gulf Coast ports reportedly fell to zero on Sunday.
“Severe weather has boosted crude futures, with short-term risks tilted to the upside on fears of supply disruptions,” said Fawad Razaqzada, market analyst at City Index.
Furthermore, rising geopolitical tensions in the Middle East might contribute to the WTI’s upside. Reuters reported that a US aircraft carrier and supporting warships have arrived in the Middle East, expanding US President Donald Trump's capabilities to defend US forces or potentially take military action against Iran.
The EIA crude oil stockpiles report will be published later in the day. A larger-than-expected crude oil inventory draw indicates stronger demand and could boost the WTI price, while a bigger build than estimated signals weaker demand or excess supply, which might drag the WTI price lower.
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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