WTI drifts lower below $89.50 as traders await progress on Middle East peace talks
- WTI price drifts lower to near $89.35 in Tuesday’s early European session.
- Iranian officials reported that they were cutting off talks with the US to end the war.
- The API crude oil weekly report is due later on Tuesday.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $89.35 during the early European trading hours on Tuesday. WTI price declines as traders have treated any progress toward ending the Iran conflict with caution, given the fragility of a US–Iran ceasefire struck in early April.
Iran's Tasnim news agency said on Monday that Tehran's negotiating team is stopping exchanges of messages with the US through mediators due to attacks on Lebanon. In response, US President Donald Trump said that Washington will keep its blockade on Iranian ports. “If they don’t want to talk, that’s OK with me,” he said.
Separately, Trump stated that he believes an agreement to reopen the Strait of Hormuz and extend the ceasefire with Iran is reachable “over the next week.” Meanwhile, Israeli Prime Minister Benjamin Netanyahu emphasized that he will continue operating against Hezbollah in Southern Lebanon.
Rising uncertainty over a possible Iran-US peace deal and fears of a total closure of the Strait of Hormuz could lift the WTI price. On the other hand, hopes for US-Iran peace negotiations could weigh on the black gold.
The release of the American Petroleum Institute (API) report will be published later on Tuesday. A larger-than-expected crude oil inventory draw indicates stronger demand and could lift the WTI price, while a bigger build than estimated signals weaker demand or excess supply, which might weigh on the WTI 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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