WTI extends upside above $62.00 after Israel attacks on Qatar
- WTI price edges higher to near $62.15 in Wednesday’s early Asian session.
- Israel attacked Hamas in Doha, raising fears of wider conflict in the Middle East.
- US crude oil stocks rose 1.25 million barrels for the week ending August 29, said API.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $62.15 during the early Asian trading hours on Wednesday. The WTI extends the rally to around $62.80 amid concern that the conflict in the Middle East could widen after Israel conducted a strike in Qatar targeting Hamas leaders. Traders brace for the Energy Information Administration (EIA) weekly crude oil stock report, which will be published later on Wednesday.
Bloomberg reported late Tuesday that Israel launched a strike on Doha, Qatar, targeting the senior leadership of Hamas. Qatar said the attack by Israel violated international law and threatens to widen the conflict in the Middle East, the source of about one-third of global oil supplies. This, in turn, boosts the WTI price.
US President Donald Trump said on Tuesday that Israeli Prime Minister Benjamin Netanyahu’s decision to launch a unilateral attack against Hamas in Qatar “does not advance Israel or America’s goals.” Trump added that he has urged the European Union (EU) to impose 100% tariffs on Chinese and Indian goods in an effort to pressure Russian President Vladimir Putin.
"The expansion of secondary tariffs to other major buyers such as China could disrupt Russian crude exports and tighten global supply, a bullish signal for oil prices," LSEG analysts wrote.
Data released by the American Petroleum Institute (API) on Tuesday showed that crude oil stockpiles in the US for the week ending August 29 rose 1.25 million barrels, compared to an increase of 622,000 barrels in the previous week. So far this year, crude oil inventories are up 8.7 million barrels, according to oil price calculations of API data.
Oil traders will keep an eye on the US Producer Price Index (PPI) inflation data for August later on Wednesday. In case of hotter-than-expected US inflation, this 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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