WTI wobbles above $65 ahead of EIA inventory data
- The Oil price oscillates in a tight range, awaiting the release of US EIA Crude Oil Stocks Change data.
- Trade deal between the US and Japan fails to strengthen the Oil price.
- US-EU trade tensions continue to cap the Oil price’s upside.
West Texas Intermediate (WTI), futures on NYMEX, trades in a tight range around $65.30 during the European trading session on Wednesday. The Oil price consolidates as investors await the weekly crude Oil inventory data, reported by the United States’ (US) Energy Information Administration (EIA).
According to estimates, the stockpiles of crude Oil declined by 1.4 million barrels. Lower Oil inventory often signifies higher consumption, a scenario that is favorable for the Oil price.
Meanwhile, the Oil price fails to capitalize on the confirmation of a bilateral deal between the United States (US) and Japan. On Tuesday, US President Donald Trump stated through a post on Truth.Social that Washington has reached a trade deal with Tokyo.
“Japan will open their Country to Trade including Cars and Trucks, Rice and certain other Agricultural Products, and other things. Japan will pay Reciprocal Tariffs to the United States of 15%,” Trump wrote.
Trade tensions between the United States (US) and the European Union (EU) continue to keep a lid on the Oil price. US-EU trade worries have escalated as the trading bloc has prepared higher countermeasures against Trump’s tariffs, which would become effective from August 1 if both economies fail to reach a deal.
The outlook of the Oil demand would weaken if the US and the EU fail to close a deal, given the size of business between both economies.
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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