WTI Oil hits fresh multi-week highs above $68.00 amid looming sanctions on Russia
- Oil appreciates further as markets brace for US sanctions on Russian Crude.
- Strong trade activity data from China has eased concerns about demand and provided additional support for Oil prices.
- News that the OPEC+ would be considering pausing supply hikes is also contributing to WTI's recovery.
Crude Oil prices extended gains on Monday, reaching levels beyond $68.00 for the first time since late June, supported by a mix of highly likely sanctions by the US against Russia, strong macroeconomic data from China, and news that the OPEC+ might pause supply hikes from October.
Trump announced a “major statement” on Russia on Monday, as he resumed shipping of patriot missiles to Ukraine on the back of his frustration with the Russian President, Putin, and his reluctance to agree to the terms of a ceasefire.
The market is anticipating further sanctions on Russian Oil, which might tighten global supply and push prices higher.
Beyond that, China’s trade balance data revealed a larger-than-expected surplus in June, boosted by a sharp increase in exports. These figures have boosted expectations about the recovery of the world’s second-largest economy and improved the outlook for global oil demand.
On Friday, market sources reported that the OPEC+ members would be considering pausing the supply hikes in October, which eased fears of a potential oversupply, as trade restrictions and the weak global economic outlook are likely to be a serious weight for demand in the mid-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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