WTI loses traction below $64.50 on easing Middle East geopolitical risks
- WTI price loses ground to near $64.25 in Tuesday’s early Asian session, down 0.20% on the day.
- The Israel-Iran ceasefire eases geopolitical risks in the Middle East, weighing on the WTI price.
- US crude oil output hit a record in April, noted EIA.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $64.25 during the Asian trading hours on Tuesday. The WTI price edges lower amid easing Middle East geopolitical risks and a possible OPEC+ output increase in August.
Fears of Middle East tensions disrupting global oil supply ease after the Israel-Iran ceasefire. This could undermine the black gold in the near term. The market has stripped out most of the geopolitical risk premium built into the price following the Iran-Israel ceasefire, said IG markets analyst Tony Sycamore.
The Organization of the Petroleum Exporting Countries and its allies (OPEC+) are ready to consider another 411,000 barrel per day (bpd) increase for August when they meet Sunday, following similar-size output hikes for May, June, and July. This would be the fourth monthly hike since the group started unwinding production cuts in April.
Meanwhile, US crude oil production hit a record 13.47 million bps in April, up from 13.45 million bpd in the previous reading, according to data released by the Energy Information Administration (EIA). This reading contributes to the WTI’s downside.
Investors will closely monitor trade negotiations, with just 10 days until US President Donald Trump’s tariffs are set to resume. Any positive developments surrounding trade talks could provide some support to the oil demand outlook, boosting the WTI price.
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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