WTI drifts higher to near $58.40 as Trump says India will stop importing Russian oil
- WTI price edges higher to near $58.40 in Thursday’s early European session.
- Trump said Modi has agreed to stop buying Russian oil.
- The EIA weekly inventory statistics will be released later on Thursday.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $58.40 during the early European trading hours on Thursday. The WTI recovers from a five-month low after US President Donald Trump said Indian Prime Minister Narendra Modi had vowed to halt purchases of Russian barrels. Traders brace for the Energy Information Administration (EIA) Crude Oil stockpiles report later on Thursday.
Trump stated that Modi has agreed to stop buying oil from Russia, adding that he would next try to get China to do the same as Washington seeks to tighten financial thumbscrews on the Kremlin as part of efforts to end the war in Ukraine, BBC reported late Wednesday.
US Treasury Secretary Scott Bessent also said that the Trump administration expects Japan to stop buying and importing energy from Russia. "We discussed issues related to economic relations between the countries and our expectation that Japan will stop importing Russian energy,” said Bessent.
"At the margin, this is a positive development for the crude oil price, as it would remove a big buyer (India) of Russian oil," said Tony Sycamore, a market analyst at IG.
The ongoing geopolitical risks might contribute to the WTI’s upside. Russia continued its attacks on Ukraine's energy system, leading to severe outages in around seven regions of eastern Ukraine. Trump said that he is considering sending long-range Tomahawk cruise missiles to Ukraine.
On the other hand, the US government shutdown has entered its 16th day. US Treasury official stated that the extended closure is costing around $15 billion per week to the US economy. A prolonged US federal shutdown could drag the Greenback lower and create a tailwind for the pair in the near term. A shrinking economy weighs down on the oil prices as demand for energy reduces.
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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