WTI holds positive ground near $66.00, eyes on Russia energy curbs
- WTI price edges higher to near $66.05 in Monday’s Asian session.
- The EU agreed to a lower price cap for Russia's crude as part of a package of sanctions against Moscow.
- Traders await the API weekly crude oil stock report due on Tuesday.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $66.05 during the early Asian trading hours on Monday. The WTI gains ground as traders assess the impact of new European sanctions on Russian oil supply. The American Petroleum Institute (API) weekly crude oil stock report will be released later on Tuesday.
The European Union (EU) last week agreed to a lower price cap for Russian crude as part of a package of sanctions against Moscow. The sanctions include restrictions on fuels made from Russian petroleum, further banking restrictions, and a ban on a major oil refinery in India and a few Chinese firms. The UK joined the EU's efforts.
The EU sanctions followed US President Donald Trump's threats last week to impose sanctions on buyers of Russian exports unless Russia agrees to a peace deal in 50 days.
US crude oil inventories fell last week, suggesting robust summer demand. The US Energy Information Administration (EIA) weekly report showed crude oil stockpiles in the US for the week ending July 11 fell by 3.859 million barrels, compared to a rise of 7.07 million barrels in the previous week. The market consensus estimated that stocks would decline by 1.8 million barrels.
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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