WTI edges lower to below $66.00 as Trump's 50-day deadline for Russia eases supply concerns
- WTI price remains on the defensive near $65.70 in Wednesday’s early Asian session.
- Crude inventories in the United States rose by 19.1 million barrels last week, noted API.
- China posted better-than-expected Q2 growth, which might help limit the WTI’s losses.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $65.70 during the early Asian trading hours on Wednesday. The WTI price edges lower amid easing concerns about supply disruption after US President Donald Trump gives a 50-day deadline for Russia to end the war in Ukraine.
Trump late Monday announced new weapons for Ukraine and threatened sanctions on buyers of Russian exports unless Russia agrees to a peace deal in 50 days. The WTI price loses ground as the 50-day deadline raises hopes that sanctions could be avoided.
US crude oil inventory unexpectedly rose last week, signaling weaker demand and weighing on the WTI price. The American Petroleum Institute (API) weekly report showed crude oil stockpiles in the US for the week ending July 11 climbed by 19.1 million barrels, compared to a fall of 7.1 million barrels in the previous week. The market consensus estimated that stocks would decline by 2 million barrels. It is the largest single-week build reported by the API in at least a decade.
On the other hand, the better-than-expected China's Gross domestic product (GDP) report could provide some support to the WTI price, as China is the world's second-largest oil consumer. The Chinese economy grew 5.2% YoY in the second quarter (Q2), compared to 5.4% in Q1, according to the National Bureau of Statistics (NBS). That was higher than the estimation of 5.1%. ”The Chinese economic data was supportive overnight," said Phil Flynn, senior analyst with Price Futures Group.
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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