WTI drifts lower below $64.00 as US targets India
- WTI price declines to $63.85 in Friday’s early Asian session.
- Traders will monitor US pressure on India to halt Russian oil imports.
- US crude stocks fell another 2.4 million barrels last week, noted EIA.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $63.85 during the early Asian trading hours on Friday. The WTI edges lower amid concerns about oversupply and US pressure on India to halt Russian oil imports.
The US has doubled tariffs on many imports from India to 50% as US President Donald Trump followed through on his threat to punish India for purchasing discounted Russian oil. This measure came into effect on Wednesday and exacerbates supply fears, weighing on the WTI price. Oil traders will closely monitor India's response to pressure from the US to stop buying Russian oil.
Reuters reported that Russia launched missile and drone attacks on Ukraine on Thursday, resulting in the deaths of at least 21 people in Kyiv. Meanwhile, the Ukrainian military said it used drones to hit two Russian oil refineries overnight. The escalating tensions between Russia and Ukraine might boost the WTI price in the near term.
Data released by the US Energy Information Administration (EIA) on Wednesday showed crude inventories declined more than expected last week. This weekly report pointed to robust demand in the world’s largest oil consumer and could support the WTI price. Crude oil stockpiles in the US for the week ending August 22 fell 2.392 million barrels, compared to a decline of 6.014 million barrels in the previous week. The market consensus estimated that stocks would decrease by 2.0 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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