WTI extends upside above $71.50 on supply hits
- WTI price trades in positive territory near $71.70 in Wednesday’s early Asian session.
- Supply disruptions mounted in Russia boost the WTI price.
- Concerns over a potential global trade war might cap the upside for WTI.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $71.70 during the early Asian session on Wednesday. The WTI price extends the rally amid the fears of supply disruptions in Russia.
WTI price edges higher after Ukrainian drones attacked a major Russian pipeline's pumping station, disrupting Kazakhstan's crude exports. On Tuesday, Russian Deputy Prime Minister Alexander Novak said that oil flows via the pipeline had been curtailed by 30-40%. According to Reuters estimates, a 30% decrease would reduce oil supplies by 380,000 barrels per day.
On the other hand, traders will closely monitor the developments surrounding further tariff policies from US President Donald Trump. Concerns over a potential global trade war could limit further gains for black gold.
Last week, US President Donald Trump ordered his administration to consider imposing reciprocal tariffs on numerous trading partners. Late Tuesday, Trump said late Tuesday that he would likely impose tariffs of around 25% on foreign cars, while semiconductor chips and drugs are set to face higher duties.
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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