WTI climbs above $62.00 on rising tensions in the Middle East
- WTI price trades in positive territory near $62.15 in Wednesday’s early European session.
- Concerns over a potential supply disruption due to escalating tensions in the Middle East lift the WTI price.
- EIA said oil prices will decline in the months ahead due to rising inventories.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $62.15 during the early Asian trading hours on Wednesday. The WTI climbs after Israel’s air force carried out a strike on Hamas’s senior political leadership in Qatar, raising fears of wider conflict in the Middle East.
Israel on Tuesday attacked the Hamas leadership in Doha, Qatar. This attack came a few hours after Israel warned it was planning to attack Gaza. These developments have led to fears of a disruption in crude oil supplies to global markets, which 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.”
On the other hand, the US Energy Information Administration (EIA) said it expects global crude prices to be under significant pressure in the months ahead due to rising inventories. This, in turn, might limit the upside for the black gold.
About the data, the American Petroleum Institute (API) reported on Tuesday 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.
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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