West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $65.70 during the early European trading hours on Monday. The WTI price declines as the United States (US)-Iran talks are set to resume later this week. Traders also brace for the release of the American Petroleum Institute (API) report, which will be released later on Tuesday.
The report that the US and Iran will hold their next round of negotiations in Geneva on Thursday provides some support to the black gold. Iranian Foreign Minister Abbas Araghchi said on Sunday that there is a “good chance to have a diplomatic solution that is based on a win-win game, and a solution is within our reach.”
However, any signs of escalating tensions between the two countries could raise concerns over supply disruption and lift the WTI price. US President Donald Trump said last week that “bad things” would happen to Iran if there was no deal to end the Islamic Republic’s development of nuclear weapons.
Trump’s tariff hike triggers fears of weaker oil demand, which might drag the WTI price lower. The US Supreme Court’s ruling, which declared Trump’s sweeping tariffs illegal, has injected uncertainty into global trade yet again, as the US President imposed a new 15% tariff on Saturday. Trump noted in a Truth Social post that the fresh levies would be “effective immediately” and warned that additional tariffs would follow.
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-slumps-below-6600-amid-hopes-for-us-iran-talks-202602230705
