WTI declines below $61.00 as US stockpile builds, Venezuelan exports resume
- WTI price drifts lower to near $60.70 in Wednesday’s Asian session.
- Large builds in US crude inventories weigh on the WTI price.
- Trump promised Iranian protesters that help is on the way.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $60.70 during the Asian trading hours on Wednesday. The WTI price declines as Venezuela resumes exports and the American Petroleum Institute (API) shows a big build in US crude inventories. Traders brace for the Energy Information Administration (EIA) crude oil stockpiles report on Wednesday.
Reuters reported on Tuesday that Venezuela has begun reversing oil production cuts made under a US oil embargo, as crude exports are also resuming. The source said two supertankers left Venezuelan seas on Monday, carrying around 1.8 million barrels of crude oil each, in what might be the first shipments of a 50-million-barrel supply agreement between Caracas and Washington to restart exports after the US capture of Venezuelan President Nicolas Maduro.
US crude inventories are experiencing a big build in US crude inventories. According to the US API weekly report, crude oil stockpiles in the US for the week ending January 9 rose by 5.27 million barrels, compared to a fall of 2.8 million barrels in the previous week. The market consensus estimated that stocks would decline by 2.0 million barrels.
Nonetheless, ongoing tensions in Iran, a major crude oil producer, could boost the WTI price. US President Donald Trump canceled all meetings with Iranian officials and promised protesters that help is on the way. The Islamic Republic's security forces have cracked down on large-scale protests, killing hundreds, according to reports. Trump has frequently threatened to intervene if the government kills protestors.
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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