WTI tumbles below $66.50 on surprise build in US stockpiles
- The WTI price edges lower to near $66.40 in Thursday’s early Asian session.
- Crude inventories in the United States rose by 3.845 million barrels last week, noted EIA.
- Iran has officially suspended its cooperation with the IAEA.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $66.40 during the early Asian trading hours on Thursday. The WTI price declines on a surprise build in US crude supplies. Oil traders await cautiously ahead of an OPEC+ meeting to decide the group's August output policy.
US crude oil inventory unexpectedly rose last week, signaling weaker demand and undermining the WTI price. The Energy Information Administration (EIA) weekly report showed crude oil stockpiles in the US for the week ending June 27 rose by 3.845 million barrels, compared to a fall of 5.836 million barrels in the previous week. The market consensus estimated that stocks would decline by 2 million barrels.
An Iranian official stated that Iran's Supreme National Security Council must approve any future International Atomic Energy Agency (IAEA) inspections of its nuclear installations, per Reuters. The government has accused the agency of supporting Western countries and justifying Israel's air strikes.
Oil traders will closely monitor the developments surrounding geopolitical risks in the Middle East. Any signs of escalation in the region or fears of oil supply disruptions could boost the WTI price in the near term.
The US June Nonfarm Payrolls (NFP) report on Thursday will be closely watched as it might offer some hints about the timing of interest rate cuts by the US Federal Reserve (Fed) this year. A lower interest rate regime could boost economic activity and thereby increase oil demand, supporting 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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