WTI drifts higher above $65.50 as traders brace for US-Iran talks
- WTI price gains momentum to near $65.60 in Thursday’s Asian session.
- The US and Iran are due to meet in Geneva on Thursday amid persistent tensions.
- US crude oil inventories rose the most in three years, EIA said.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $65.60 during the Asian trading hours on Thursday. The WTI price edges higher amid ongoing tensions between the US and Iran. Traders will closely monitor the developments surrounding US-Iran nuclear talks later on Thursday.
US President Donald Trump last week threatened to attack Iran if negotiations fail. Meanwhile, tens of thousands of US service members are at risk after Iran said that all US military bases in the Mideast would be considered legitimate targets. US and Iranian officials are due to meet in Geneva on Thursday for a third round of indirect talks. Any signs of escalating tensions between the two countries could boost the WTI price in the near term.
"That seemed to suggest that they are more open to talking about their nuclear program," said Phil Flynn, an analyst at Price Futures Group. However, the risk of an attack on Iran is still high, he said.
On the other hand, a surge in weekly crude oil inventories could raise oversupply concerns and weigh on black gold. According to the Energy Information Administration (EIA) weekly report, crude oil stockpiles in the US for the week ending February 20 climbed by 15.989 million barrels, compared to a fall of 9.014 million barrels in the previous week. The figure rose the most in three years.
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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