WTI price attracts some sellers to $72.40 in Thursday’s Asian session.
The firmer USD weighs on the WTI, but the fear of supply disruptions might cap its downside.
US crude oil inventories declined by 959,000 last week, according to the EIA.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $72.40 on Thursday. The WTI price edges lower amid the stronger US Dollar (USD). However, the concerns over supply disruptions might cap the downside for the WTI price.
A strengthening of the Greenback exerts some selling pressure on the black gold as it makes oil more expensive for holders of other currencies. "The dollar's safe haven status is appreciated as fears of renewed U.S. inflationary pressure grow," said Tamas Varga, an analyst with oil broker PVM.
US crude oil inventories fell for a seventh consecutive week, which might support the WTI price. The US Energy Information Administration (EIA) weekly report showed crude oil stockpiles in the United States for the week ending January 3 declined by 959,000 barrels, compared to a fall of 1.178 million barrels in the previous week. The market consensus estimated that stocks would decrease by 250,000 barrels.
Additionally, new sanctions on Iranian and Russian crude exports could limit global oil supplies and boost the black metal price. The Biden administration plans to impose more sanctions on Russia's oil exports ahead of Donald Trump's inauguration on January 20.
Oil traders will take more cues from the Fedspeak later on Thursday. All eyes will be on the US employment data for December, which will be released on Friday. Any signs of a solid labor market could lift the Greenback and weigh on the USD-denominated commodity price in the near term.
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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