WTI declines to near $64.50 on profit-taking
- WTI price edges lower to near $64.55 in Thursday’s Asian session.
- US crude inventories fell by 607,000 barrels last week, the EIA said.
- Geopolitical risks could boost the WTI price.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $64.55 during the Asian trading hours on Thursday. The WTI decline as traders take profits after a rise to a three-week high in the previous session. However, a decline in US weekly crude inventories and concerns over Ukraine’s attacks on Russia's energy infrastructure might cap the WTI’s downside.
US crude inventories unexpectedly fell last week. Data released by the US Energy Information Administration (EIA) on Wednesday showed that crude oil stockpiles in the US for the week ending September 19 declined by 607,000 barrels, compared to a fall of 9.285 million barrels in the previous week. Analysts forecast in a Reuters poll estimated that stocks would increase by 235,000 barrels
"The report is somewhat supportive given the draws across the board here," said John Kilduff, partner with Again Capital, referring to the crude, distillate, and gasoline inventory draws in the EIA report.
The ongoing geopolitical tensions in the Middle East and Russia might lift the black gold. In recent weeks, Ukraine has stepped up drone attacks on Russian energy infrastructure, targeting refineries and export terminals to reduce Moscow's export revenues. As a result, Russia is experiencing shortages of certain fuel grades with possible export restrictions on fuel if needed.
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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