WTI holds gains above $61.00 as US bars Chevron from exporting Venezuelan Oil
- WTI price gains ground due to increased supply risks following the US ban on Chevron from exporting Venezuelan Oil.
- Oil prices may struggle as OPEC+ is expected to increase additional Oil output of 411,000 barrels per day.
- The US may impose fresh sanctions on Russia in response to its recent drone attacks on Ukraine.
West Texas Intermediate (WTI) Oil price edges higher after registering losses in the previous session, trading around $61.10 per barrel during the European hours on Wednesday. Crude Oil prices appreciate due to increased supply risks as Chevron is barred by the Trump administration from exporting Venezuelan crude under a new authorization, which allows the US Oil major to keep assets in Venezuela but not to export Oil, per Reuters.
However, the upside of the Oil prices could be limited due to increased hopes of additional output of 411,000 barrels per day from OPEC+, the Organization of the Petroleum Exporting Countries and their allies. However, the group is expected to make no policy change at a scheduled meeting on Wednesday, though eight members of the group will hold talks on Saturday to make a final decision on the July output hike, three delegates within the group told Reuters.
Meanwhile, Russia continued its drone attacks on Ukraine, raising supply risks from one of the world’s largest producers. The United States may impose fresh sanctions on Russia this week after stalled peace negotiations in Ukraine, as President Trump voiced frustration with Russian President Putin.
Last week, US and Iranian delegations concluded a fifth round of talks in Rome, signaling limited progress. Both sides had many disagreements, notably over the issue of Iran's uranium enrichment, which was difficult to resolve. The failure of the US-Iran nuclear talks is expected to keep sanctions on Iran’s Oil in place.
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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