WTI holds steady near $58.00 amid uncertainty over Venezuela's oil flow changes
- WTI price flat lines near $58.10 in Tuesday’s early Asian session.
- Traders will assess the potential impact on crude oil flows from Venezuela.
- The API crude oil stockpiles report is due later on Tuesday.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $58.10 during the early Asian trading hours on Tuesday. The WTI price holds steady as traders assess the possible impact on crude flows from Venezuela following the US capture of Venezuelan President Nicolas Maduro.
Over the weekend, the US military entered Venezuela, capturing and bringing Venezuelan President Nicolas Maduro and his wife, Cilia Flores, to New York. US President Donald Trump said on Saturday that Washington would run Venezuela at least temporarily and tap its vast oil reserves to sell to other nations. The Trump administration has spoken to multiple oil companies about rebuilding Venezuela, according to Taylor Rogers, a White House spokeswoman.
Traders continue to digest news of Maduro's capture and that the US would take control of the OPEC member whose crude exports had been under a US sanction that remains in effect. "The unknown for the oil market is how oil flows from Venezuela will change due to U.S. actions," said Aegis Hedging analysts.
The developments surrounding Venezuela's oil flow changes will be closely watched. Any signs of heightened geopolitical tensions and disruption risks linked to Venezuela could boost the WTI price in the near term.
The release of the American Petroleum Institute (API) crude oil stockpiles report will be the highlight later on Tuesday. A larger-than-expected crude oil inventory draw indicates stronger demand and could boost the WTI price, while a bigger build than estimated signals weaker demand or excess supply, which might drag the WTI price lower.
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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