WTI declines to near $58.00 amid Venezuela oil flow uncertainty
- WTI price drifts lower to near $58.00 in Tuesday’s early European session.
- Traders assess the possible impact on crude flows from Venezuela after the US capture of Maduro.
- The API crude oil stockpiles report will be released later on Tuesday.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $58.00 during the early European trading hours on Tuesday. The WTI price declines amid Venezuela uncertainty. Traders continue to assess the potential impact on crude flows from Venezuela following the United States' (US) capture of Venezuelan President Nicolas Maduro.
US President Donald Trump’s plan to take control of Venezuela’s oil industry and ask American companies to revitalize it after capturing Maduro in a raid isn’t likely to have a significant immediate impact on oil prices.
Priyanka Sachdeva, senior market analyst at brokerage Phillip Nova, said that the oil price response to major geopolitical events, such as the US military intervention in Venezuela and ongoing strikes on Russian energy infrastructure, has been surprisingly muted, implying that fundamental demand-supply factors remain the key concern.
Traders will closely monitor the developments surrounding Venezuela's oil flow changes. Any signs of heightened geopolitical tensions and disruption risks linked to Venezuela could boost the WTI price in the near term.
The release of the American Petroleum Institute (API) crude oil stockpiles report will be in the spotlight later in the day. A larger-than-expected crude oil inventory draw indicates stronger demand and could boost the WTI price, while a bigger build than estimated signals weaker demand or excess supply, which might drag the WTI price lower.
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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