WTI edges lower below $98.50 on US-Iran deal optimism
- WTI price drifts lower to near $98.20 in Thursday’s early European session.
- Optimism over a possible US-Iran agreement weighs on the WTI price.
- US crude inventories fell last week on strong demand, EIA reported.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $98.20 during the early European trading hours on Thursday. The WTI price edges lower after US President Donald Trump said talks with Iran are in the final stages.
Bloomberg reported on Wednesday that Trump said the US is in the "final stages" with Iran, bolstering hopes that crude supplies will soon start flowing out of the Strait of Hormuz. This, in turn, weighs on the WTI price.
However, Trump warned of further attacks unless Iran agrees to a deal. Iranian President Masoud Pezeshkian stated that Tehran was not on the brink of giving in. “Forcing Iran to surrender through coercion is nothing but an illusion,” Pezeshkian posted on X.
Traders remain wary about the outcome of peace talks as disruption to Middle Eastern supply continues. Any signs of escalating tensions between the US and Iran could lift the WTI price in the near term.
US crude oil inventories fell last week as demand remained elevated. According to the Energy Information Administration (EIA) report, crude oil stockpiles in the US for the week ending May 15 fell by 7.864 million barrels, compared to a decline of 4.306 million barrels in the previous week. The market consensus was for a decrease of 2.9 million barrels.
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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