WTI drifts lower below $58.50 amid Russia-Ukraine peace hopes
- WTI price edges lower to near $58.40 in Wednesday’s Asian session.
- Traders will closely watch the Russia-Ukraine peace plan.
- US crude oil inventories declined for the second consecutive week.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $58.40 during the Asian trading hours on Wednesday. The WTI declines as the efforts by the US to end the Russia-Ukraine conflict send optimism of a ceasefire sooner than expected. Traders await the release of the Energy Information Administration (EIA) crude oil stockpiles report later on Wednesday.
Oil traders will closely monitor the developments surrounding the Russia-Ukraine peace talks as US President Donald Trump's special envoy Steve Witkoff met Russian President Vladimir Putin in the Kremlin on Tuesday. Any positive signals of a peace deal could drag the WTI price lower.
On the other hand, escalating tensions could boost the black gold in the near term. Recently, Ukrainian drones attacked a Black Sea terminal owned by the Caspian Pipeline Consortium, forcing it to halt its operations.
A renewal in rate cut bets from the US Federal Reserve (Fed) could weigh on the US Dollar (USD) and underpin the USD-denominated commodity price. According to the CME FedWatch Tool, interest rate futures traders are pricing in a nearly 89% probability of a quarter percentage point cut in the fed funds rate by the Fed next week, to 3.50%-3.75%, up from just 63% a month ago.
Data released by the American Petroleum Institute (API) on Tuesday showed that crude oil stockpiles in the US for the week ending November 23 fell by 2.48 million barrels compared to a decline of 1.9 million barrels in the previous week. Crude oil inventories in the US are so far showing a net gain of 4.9 million barrels for the year, according to Oilprice calculations of API data.
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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