WTI holds gains near $64.50 on supply concerns, Indian demand boost
- WTI rises on ongoing supply concerns amid escalating US–Iran tensions.
- Oil gains support as India cuts Russian crude imports, increasing purchases from the Middle East and West Africa.
- Crude faces downside after API reports a 13.4 million-barrel inventory surge, the largest since November 2023.
West Texas Intermediate (WTI) Oil price gains over 0.5%, trading around $64.50 per troy ounce during the early European hours on Wednesday. Crude Oil prices advance amid persistent supply concerns linked to escalating United States (US)–Iran tensions.
Reuters cited reports indicating that Washington may consider intercepting vessels transporting Iranian crude and could deploy an additional carrier strike group if negotiations over Iran’s nuclear program break down. Although initial talks last week were constructive, traders remain wary that a collapse in discussions could prompt US strikes on Tehran, threatening Iranian Oil exports or provoking retaliatory action.
Oil prices are further underpinned by rising demand from India, as refiners reduce Russian crude purchases to advance a trade deal with Washington, boosting imports from the Middle East and West Africa.
However, Crude prices may face downside pressure after an American Petroleum Institute (API) report showed a sharp stockpile build, with Weekly Crude Oil Stock surging by 13.4 million barrels for the week ending February 6, the largest increase since November 2023. This far exceeded Reuters’ survey estimates, which projected an average rise of around 800,000 barrels last week. Traders are now awaiting official weekly inventory data from the US Energy Information Administration (EIA) due Wednesday.
Market participants are also focused on OPEC’s (Organization of the Petroleum Exporting Countries) monthly market outlook later today, followed by the International Energy Agency’s (IEA) report on Thursday. The IEA has cautioned that supply is likely to outpace demand this year, potentially leading to a significant surplus.
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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