WTI posts modest gains above $64.50 as US crude inventories unexpectedly fall
- WTI price drifts higher to near $64.55 in Thursday’s early European session.
- US crude inventories dropped by 607,000 barrels in the week ending September 19, the EIA said.
- Russia-Ukraine war raises supply risks, supporting 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 edges higher due to an unexpected fall in US crude inventories and fears that Ukrainian strikes on Russian energy facilities might threaten supply.
Data released by the US Energy Information Administration (EIA) on Wednesday revealed 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.
US President Donald Trump said on Tuesday that NATO nations should shoot down Russian aircraft that violate their airspace, raising the specter of supply disruption and lifting the black gold. In recent weeks, Ukraine has intensified drone attacks against Russian energy facilities, including refineries and export hubs, in an attempt to curb Moscow’s export revenues.
"The focus recently has shifted back to Eastern Europe and the possible introduction of fresh sanctions on Russia," said PVM Oil Associates analyst Tamas Varga.
Federal Reserve (Fed) Chair Jerome Powell struck a cautious tone on further easing on Tuesday, saying that the US central bank needs to continue balancing the competing risks of high inflation and a weak job market in its coming policy decisions. Meanwhile, Chicago Fed President Austan Goolsbee warned against a series of rate cuts. The cautious tone of Fed officials could boost the US Dollar (USD) and weigh on the USD-denominated commodity price in the near 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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