WTI rises above $67.00 due to rising supply concerns, US tariffs delay
- WTI price gains ground amid rising supply concerns following the Houthis' attack in the Red Sea.
- The implementation of the US tariffs on major trading partners contributes support for the Oil demand.
- OPEC+ is set to increase oil output by approximately 550,000 barrels per day in September.
West Texas Intermediate (WTI) Oil price extends its winning streak for the third successive session, trading around $67.60 per barrel during the Asian hours on Wednesday. Crude Oil prices may further gain ground due to rising concerns over supply disruptions, driven by the renewed geopolitical risks.
Yemen's Houthis, on Tuesday, attacked a Liberian-flagged bulk carrier in the Red Sea, killing three mariners and wounding two others. Reports indicate the vessel sank, raising concerns over potential disruptions to critical shipping routes from the Middle East to Europe and Asia. On Monday, a drone strike on a Greek-managed ship left two crew members injured and two others missing.
However, the upside of the crude Oil prices could be restrained as Oil traders adopt caution over new US tariffs threats. However, the delay in implementation of the US tariffs on major trading partners, including Japan, South Korea, and the European Union (EU), offers hopes to reach an agreement, which provides support for the Oil demand. Trump pushed the previous deadline of July 9 to August 1, and declared, "No extensions will be granted."
The Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, is preparing to approve an increase of about 550,000 bpd for September when it meets on August 3. This follows Saturday’s decision by the Oil group to raise Oil output by 548,000 barrels per day in August.
The Energy Information Administration (EIA) published its monthly report on Tuesday, forecasting that the United States (US) will produce less Oil in 2025 than previously expected. This could be attributed to declining Oil prices, which have prompted US producers to dig slowly this year.
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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