WTI edges higher above $62.00 as US-Iran nuclear talks stall
- WTI price gains ground to around $62.10 in Tuesday’s early Asian session.
- Iran said nuclear talks could break down if the US insists on no enrichment.
- A US credit rating cut by Moody’s and slowing retail sales in China could drag the WTI price lower.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $62.10 during the Asian trading hours on Tuesday. The WTI price edges higher on signs of a breakdown in US negotiations with Iran over its nuclear program, while Moody's downgrades the US national credit rating.
Deputy Foreign Minister Majid Takhtravanchi said on Monday that nuclear talks between Iran and the US "will lead nowhere" if Washington insists that Tehran drop its uranium enrichment activity to zero. On Sunday, US special envoy Steve Witkoff emphasized that any new deal between the US and Iran must include an agreement to refrain from enrichment, which might lead to the development of nuclear weapons. Iran said that its nuclear energy program has entirely peaceful purposes. Stalled nuclear talks between the US and Iran supported the WTI price.
On the other hand, Moody’s lowered the US rating from 'AAA' to ‘AA1,’ citing that successive US administrations had failed to reverse ballooning deficits and interest costs. This raised questions about the economic health of the world's largest oil-consuming nation, which might exert some selling pressure on the black gold.
Additionally, slowing retail sales in China, the top oil importer, might contribute to the WTI’s downside. Data released by the National Bureau of Statistics (NBS) showed Monday that the country’s Retail Sales rose 5.1% year-over-year in April versus 5.5% expected and 5.9% in March.
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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