WTI holds below $61.00 amid supply concerns, all eyes on OPEC+ meeting
- WTI price drifts lower to around $60.90 in Wednesday’s early Asian session.
- Hope for progress in US-Iran nuclear talks and potential higher OPEC+ output weigh on the WTI price.
- Oil traders await OPEC+ meeting on Saturday for fresh impetus.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $60.90 during the Asian trading hours on Wednesday. The WTI price edges lower amid supply concerns after Iranian and US delegations made progress in their nuclear talks.
US President Donald Trump expressed hope for progress in nuclear talks with Iran after a fifth round of talks in Rome last week. Iranian Foreign Minister Abbas Araghchi said that the negotiations are too complicated to be resolved in two or three meetings and there was potential for progress in nuclear negotiations after Oman made several proposals. However, Trump said American negotiators made “real progress” during “very good” nuclear talks with Iran over the weekend.
Traders will closely monitor the developments surrounding the US-Iran nuclear talks. If negotiations between the two countries fail, this would limit the Iranian oil supply. However, any signs of resolution could add Iranian supply to the market, which might drag the WTI price lower.
Furthermore, expectations that the Organization of the Petroleum Exporting Countries and its allies (OPEC+) will decide to increase output at a meeting this week might contribute to the WTI’s downside. OPEC+ will decide July oil production levels on Saturday, earlier than previously planned.
The sources previously told Reuters that will entail another 411,000 barrels per day of production for a third consecutive month. Russian Prime Minister Alexander Novak said that OPEC+ has not yet discussed increasing output by another 411,000 barrels per day ahead of its meeting.
On the other hand, easing fears of trade tensions between the US and the European Union (EU) could provide some support to the black gold ahead of the OPEC+ decision. Trump announced an extension on the 50% tariff deadline on the European Union (EU) until July 9 after a phone call with Commission President Ursula von der Leyen.
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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