West Texas Intermediate (WTI) US Crude Oil prices kick off the new week on a weaker note as signs of progress in the US-Iran talks diminish the odds of a military confrontation and the risk of supply disruption. The black liquid, however, bounces off the Asian session low and currently trades around the $63.00 mark, down over 0.50% for the day.
Despite differences over the agenda, indirect talks between the US and Iran on the future of the latter’s nuclear program ended on Friday with a broad agreement to maintain a diplomatic path. Iran’s foreign minister, Abbas Araghchi, described the eight hours of meetings as a good start conducted in a good atmosphere. US President Donald Trump described the talks as very good and said that another meeting would be held early this week. The development eases tensions in the Middle East – a premier global energy hub – and weighs on Crude Oil prices at the start of a new week.
Meanwhile, the US announced new sanctions targeting Iran’s oil and petrochemical trade, hours after indirect talks, keeping a lid on the optimism and limiting the downside for the black liquid. Apart from this, a broadly weaker US Dollar (USD), which tends to benefit the USD-denominated commodities, turns out to be another factor that assists Crude Oil prices in attracting some buyers near mid-$62.00s. This makes it prudent to wait for some follow-through selling before positioning for an extension of the recent pullback from over a five-month high, around the $66.25 area, touched last month.
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-retakes-6300-as-us-sanctions-on-iran-and-weaker-usd-offset-easing-us-iran-tensions-202602090131
