WTI trades higher near $65.00 as US crude stocks indicate strong demand
- WTI price appreciates as a larger-than-expected draw in US crude stocks, signaling firm demand.
- The US EIA reported a 5.8 million barrel drop in crude Oil inventories last week.
- Oil prices may face challenges as the Israel-Iran ceasefire eased supply concerns.
West Texas Intermediate (WTI) Oil price halts its three-day losing streak, trading around $64.90 per barrel during the Asian hours on Thursday. Crude Oil prices edge higher as a larger-than-expected draw in United States (US) crude stocks, which signaled firm demand.
The US Energy Information Administration (EIA) Crude Oil Stocks Change reported on Wednesday that crude inventories fell 5.8 million barrels to an 11-year seasonal low in the week ending June 20 amid rising refining activity and demand. Moreover, Gasoline stocks surprisingly fell by 2.1 million barrels, defying forecasts for a 381,000-barrel increase, and climbed to their highest since December 2021.
However, the downward pressure on Oil prices may continue amid easing supply concerns, driven by the Israel-Iran ceasefire. Traders will likely focus on the developments surrounding US-Iran talks and Middle East conflicts.
US President Donald Trump said that the United States (US) and Iran would hold a meeting next week, but asked about the necessity for a diplomatic solution on Iran's nuclear program, citing the damage that American bombing had done to key sites, per Bloomberg.
This follows after President Trump’s renewed commitment to the maximum pressure campaign on Iran, including Oil export restrictions. However, Trump hinted at a potential easing of enforcement to support Iran’s reconstruction and indicated that China may continue importing Iranian crude.
Last week, Igor Sechin, head of Russia’s largest Oil producer Rosneft, said OPEC+, which includes OPEC members and allies like Russia, could advance its planned output increases by about a year from the original schedule.
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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