WTI stays below $58.00, nears 20% yearly drop
- WTI is on track for a nearly 3% December decline, marking almost a 20% drop for the year.
- Russia vowed to harden its peace-talk stance after accusing Kyiv of an attack, which Kyiv dismissed as baseless.
- Oil surplus expectations rose as higher OPEC+ and non-OPEC output combined with muted demand growth.
West Texas Intermediate (WTI) Oil price loses ground after two days of gains, trading around $57.70 per barrel during the Asian hours on Wednesday. WTI is down nearly 3% in December, heading for a fifth straight monthly loss and nearly a 20% annual drop. However, crude Oil prices rose earlier this week as investors reassessed fading hopes of a Russia-Ukraine peace deal following alleged strikes on Russian President Vladimir Putin’s residence.
Reuters cited a note from Matt Portillo of Tudor, Pickering Holt, who said the purported attack on Russian President Vladimir Putin’s home could revive a risk premium and keep prices rangebound. Russia said it would harden its stance in peace talks after accusing Kyiv of the attack, an allegation Kyiv rejected as baseless and aimed at derailing negotiations.
Moreover, Saudi air strikes in Yemen and Iran’s declaration of a “full-scale war” with the United States (US), Europe, and Israel have heightened fears of wider instability, while Trump warned of further strikes if Iran resumes rebuilding its nuclear programme.
Expectations of a sizeable Oil surplus, driven by higher output from the Organization of the Petroleum Exporting Countries and its allies, commonly known as OPEC+ and non-OPEC producers, and muted demand growth, gradually weighed on Oil prices in 2025. OPEC+ is expected to stick to its plan to pause supply increases in Q1 2026 when it meets on Sunday.
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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