WTI climbs to near $63.00 on report that Israel is preparing to strike Iran
- WTI price edges higher to around $62.95 in Wednesday’s early Asian session.
- Oil inventories rose by 2.499 million barrels in the week ended May 16, according to the API.
- A US credit rating cut by Moody’s might cap the WTI’s upside.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $62.95 during the Asian trading hours on Wednesday. The WTI price surges after CNN reported that US intelligence suggests Israel is making preparations to possibly strike Iranian nuclear facilities.
The United States (US) has obtained new intelligence suggesting that Israel is making preparations to strike Iranian nuclear facilities, even as US President Donald Trump has been pursuing a diplomatic deal with Tehran, multiple US officials familiar with the latest intelligence told CNN. It isn’t clear that Israeli leaders have made a final decision to carry out the strikes, CNN said, citing unnamed officials. Whether and how Israel attacks will most likely be determined by its assessment of the US negotiations with Tehran over its nuclear program.
The American Petroleum Institute (API) weekly report showed crude oil stockpiles in the US for the week ending May 16 climbed by 2.499 million barrels, compared to a rise of 4.287 million barrels in the previous week. The market consensus estimated that stocks would drop by 1.85 million barrels. So far this year, crude oil inventories are up more than 25 million barrels, according to Oilprice calculations of API data.
Moody’s lowered the US rating from 'Aaa' to ‘Aa1,’ citing that successive US administrations had failed to reverse ballooning deficits and interest costs. This raised questions about the economic health of the world's largest oil-consuming nation, which might cap the upside for the black gold.
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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