WTI jumps above $92.50 amid US and Iran’s fragile ceasefire
- WTI price climbs to $92.80 in Thursday’s Asian session, adding 1.75% on the day.
- Hezbollah claimed attacks on Israel in response to ceasefire violations.
- US crude oil inventories rose more than expected last week, said EIA.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $92.80 during the Asian trading hours on Thursday. The WTI price jumps after Iran accuses the US of violating elements of a two-week ceasefire agreement.
Hezbollah said on Thursday that it fired rockets toward northern Israel in response to “ceasefire violations” committed by the Israeli army, per Reuters. On Wednesday, Iran’s parliamentary speaker, Mohammad Bagher Ghalibaf, stated that the US had breached the terms of the ceasefire deal.
Nonetheless, US President Donald Trump and Israeli Prime Minister Benjamin Netanyahu said the ceasefire between the US and Iran does not include operations against Hezbollah in Lebanon. Concerns that Middle East tensions could escalate again and disrupt energy supplies might boost the WTI price in the near term.
US crude oil inventories continue to climb, which might cap the upside for the WTI price. According to the US Energy Information Administration (EIA) weekly report, crude oil stockpiles in the US for the week ending April 3 climbed by 3.081 million barrels, compared to an increase of 700,000 barrels in the previous week. The market consensus was for a rise of 5.451 million barrels.
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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