West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $61.70 during the Asian trading hours on Thursday. The WTI gains traction amid a larger-than-expected crude inventory build. However, easing geopolitical tensions in the Middle East might cap its upside. Traders brace for the speech by Federal Reserve (Fed) Chair Jerome Powell later on Thursday for fresh impetus.
Data released by the US Energy Information Administration (EIA) on Wednesday showed that crude oil stockpiles in the US for the week ending October 3 climbed by 3.715 million barrels compared to an increase of 1.792 million barrels in the previous week. Analysts estimated that stocks would rise by 2.25 million barrels. Meanwhile, EIA noted that total weekly petroleum products supplied, a proxy for US oil consumption, climbed last week to 21.990 million bps, the most since December 2022.
“The demand numbers are pretty strong, and that should keep the market supported,” said Phil Flynn, a senior analyst at Price Futures Group.
On the other hand, geopolitical tensions in the Middle East eased. US President Donald Trump announced late Wednesday that Israel and Hamas have both signed off on the first phase of peace plan, per the BBC. Israeli Prime Minister Benjamin Netanyahu stated that he would convene the government on Thursday to approve the ceasefire deal. These developments could reduce the war-related risk premium and prompt investor sell-offs.
Earlier this week, the Organization of the Petroleum Exporting Countries and its allies (OPEC+) agreed to raise its output targets for November by 137,000 bps on growing concerns about a looming glut in the oil market.
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.
Source: https://www.fxstreet.com/news/wti-edges-higher-above-6150-as-us-crude-oil-inventories-rise-202510090656
