- WTI consolidates its recent losses to a two-week low amid mixed cues.
- Easing supply disruption worries and a stronger USD act as a headwind.
- Traders seem reluctant ahead of OPEC+ meeting on Thursday and US data.
West Texas Intermediate (WTI) US Crude Oil prices struggle to gain any meaningful traction on Tuesday and oscillate in a range below the $68.00/barrel mark during the Asian session.
A ceasefire deal between Israel and the Lebanon-based Hezbollah militant group eased concerns about supply disruptions from the Middle East. This, in turn, is seen as a key factor that keeps the black liquid depressed near a two-week low touched on Monday. Furthermore, the recent US Dollar (USD) strength is seen undermining demand for USD-denominated commodities, including Crude Oil prices.
That said, the worsening Russia-Ukraine conflict keeps geopolitical risks premium in play and acts as a tailwind for the black liquid. Apart from this, expectations that the Organization of Petroleum Exporting Countries and allies (OPEC+) would further delay plans to increase production amid persistent concerns over slowing demand growth contribute to limiting the downside for Crude Oil prices.
Traders also seem reluctant to place aggressive bets and opt to wait for important US macro releases scheduled at the beginning of a new month, including the US monthly employment details, or the Nonfarm Payrolls (NFP) report. The crucial data would influence expectations about the Federal Reserve’s (Fed) rate-cut path, which, in turn, will drive the USD demand and provide a fresh impetus to Crude Oil prices.
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.
