WTI slumps to near $61.00, traders await fresh round of nuclear talks between US and Iran
- WTI price edges lower to around $61.10 in Thursday’s Asian session.
- US-Iran will hold nuclear talks, weighing on the WTI price.
- Oil inventories rose by 1.328 million barrels in the week ended May 16, according to the EIA.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $61.10 during the Asian trading hours on Thursday. The WTI price edges lower on the report that a fresh round of nuclear talks between the United States and Iran would take place later this week.
On Tuesday, the US obtained new intelligence suggesting that Israel is making preparations to strike Iranian nuclear facilities, even as US President Donald Trump has been pursuing a diplomatic deal with Tehran. It isn’t clear that Israeli leaders have made a final decision to carry out the strikes, CNN said, citing unnamed officials.
An attack by Israel would hinder any progress in those negotiations and contribute to tension in the Middle East, which provides about one-third of the world's petroleum. Next round of Iran-US talks will take place on Friday in Rome. Any signs of progress of nuclear talks might cap the upside for the WTI price.
About the data, the US Energy Information Administration (EIA) weekly report showed crude oil stockpiles in the US for the week ending May 16 climbed by 1.328 million barrels, compared to a rise of 3.454 million barrels in the previous week. The market consensus estimated that stocks would drop by 1.85 million barrels.
Oil traders will keep an eye on the US economic data released later on Thursday, including the advanced S&P Purchasing Managers Index (PMI), the Chicago Fed National Activity Index, the usual Initial Jobless Claims and Existing Home Sales reports. The downbeat readings could exert some selling pressure on the Greenback and lift 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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