WTI trades below $66.00 as US crude build fuels oversupply concerns
- WTI falls after API reported a 11.4 million-barrel US crude build, reversing the prior 0.609 million draw.
- Oil losses may be limited as traders weigh supply risks before US-Iran nuclear talks.
- Traders assess Oil demand risks after Trump’s 10% tariff, with plans to raise it to 15%.
West Texas Intermediate (WTI) Oil price loses ground for the second successive session, trading around $65.90 per barrel during the European hours on Wednesday. WTI price declined after a sharp build in United States (US) crude inventories fueled oversupply concerns, with traders awaiting the Energy Information Administration (EIA) report due later in the day.
The American Petroleum Institute (API) reported that weekly US Crude Oil Stock rose by 11.4 million barrels in the week ended February 20, compared with a draw of 0.609 million barrels previously.
However, losses in Oil prices could be limited as investors assess supply risks ahead of a third round of nuclear talks between the US and Iran. In his State of the Union (SoTU) address, President Donald Trump reiterated his preference for diplomacy but accused Iran of rebuilding its nuclear program and pursuing missiles capable of striking the US.
Iran’s deputy foreign minister said Tehran would do “whatever it takes” to secure a deal with Washington. Markets are closely watching the Strait of Hormuz, a key chokepoint handling roughly 20% of global oil flows, where any escalation could disrupt supply.
Traders are also evaluating the potential impact on Oil demand of new US trade measures after Trump’s 10% global tariff took effect on Tuesday, with efforts underway to raise it to 15%.
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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