WTI gains traction to near $79.50 after US strikes on Iran
- WTI price gains ground to near $79.50 in Thursday’s early Asian session.
- US military carried out another round of strikes against Iran.
- US crude inventories fell 1.7 million barrels last week, said EIA.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $79.50 during the early Asian trading hours on Thursday. The WTI edges higher to near a one-month high after the US launched multiple waves of strikes on Iranian coastal military assets and reinstated a naval blockade of Iran.
The Guardian reported on Wednesday that the US Central Command (CENTCOM) said that it has launched another wave of strikes against Iran in a further effort to keep the Strait of Hormuz open. CENTCOM said US aircraft fired missiles into an oil tanker’s smokestack in the critical waterway, disabling the vessel.
US President Donald Trump said that he does not like giving deadlines when asked by reporters if Iran has a deadline before the US starts attacking Iranian bridges. The escalation in the conflict revives concerns over oil supply disruption, boosting the WTI price.
US crude oil inventories fell last week as exports picked up from the week before and refineries raised their capacity use. According to the US Energy Information Administration (EIA), crude oil stockpiles in the US for the week ending July 10 declined by 1.693 million barrels, compared to a fall of 2.998 million barrels in the previous week. The market consensus was for a decrease of 2.6 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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