WTI drifts lower to near $62.00 on talks to end Russian invasion of Ukraine
- WTI price tumbles to around $62.05 in Wednesday’s early Asian session.
- The White House said Russia-Ukraine meeting plans are ‘underway’ following Trump meetings.
- US crude inventories fell 2.4 million barrels last week, API said.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $62.05 during the early Asian trading hours on Wednesday. The WTI edges lower on the prospect of peace in Ukraine after the end of talks between US President Donald Trump and Ukrainian President Volodymyr Zelenskiy.
Oil traders expect that a meeting over a potential agreement to legitimize or end Russia's invasion of Ukraine could ease sanctions on Russian crude oil. This, in turn, could boost global supply and weigh on the WTI price. Trump said arrangements were being made for a meeting between Russian President Vladimir Putin and Zelenskiy, which could lead to a trilateral summit involving all three leaders.
Traders will closely monitor the developments surrounding progress toward a ceasefire to the war in Ukraine. Any possible peace deal could lead to fewer restrictions on Russia’s crude exports, although Moscow has largely kept its oil flowing.
The American Petroleum Institute (API) showed a fall in crude stocks last week, surpassing expectations. This report signaled a stronger demand and might cap the downside for the WTI price. According to the API weekly report, crude oil stockpiles in the US for the week ending August 15 declined 2.4 million barrels, compared to a rise of 1.5 million barrels in the previous week. The market consensus estimated that stocks would decrease by 1.2 million barrels.
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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