WTI sets for weekly drop near $65.50 as US-Iran talks continue
- WTI price trades in positive territory near $65.65 in Friday’s early European session.
- The US and Iran will continue nuclear talks next week after making progress in Geneva.
- Crude oil stockpiles in the US rose by 15.989 million barrels last week, EIA said.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $65.65 during the early European trading hours on Friday. The WTI price edges higher on the day, but heads for a weekly decline after the United States (US) and Iran extended nuclear talks. The Organization of the Petroleum Exporting Countries and its allies (OPEC+) are considering resuming output increases at Sunday’s meeting.
Oman's Foreign Minister, Badr al-Busaidi, said on Thursday that talks between the US and Iran on nuclear issues have made "significant progress.” Negotiations will resume at a technical level in Vienna next week after an initial consultation period.
Before the technical meeting in Vienna, each delegation will consult internally with its respective governments to evaluate the operational details of a possible agreement. Easing concerns about potential hostilities that could disrupt supply lifts the WTI price.
Traders will closely monitor the developments surrounding the US-Iran negotiations. Last week, US President Donald Trump threatened to strike Iran unless it made a deal. Trump gave Tehran a deadline of 10-15 days to reach an agreement. Any signs of rising tensions between the two countries could boost the WTI 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.
"Traders are in wait-and-see mode heading into the weekend with Iran tensions mounting on one hand and the OPEC+ meeting on Sunday with a likely production hike on the other hand," said June Goh, a senior analyst at Sparta Commodities.
US crude oil inventories climbed the most in three years. According to the Energy Information Administration (EIA) weekly report, crude oil stockpiles in the US for the week ending February 20 rose by 15.989 million barrels, compared to a fall of 9.014 million barrels in the previous week.
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