WTI recovers above $66.00 on softer US Dollar
- WTI price rebounds to around $66.25 in Wednesday’s early Asian session.
- Softer USD and rising Middle East geopolitical tensions boost the WTI price.
- Crude oil stockpiles in the US rose by 4.247 million barrels last week, according to the API.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $66.25 during the early Asian session on Wednesday. The WTI price recovers some lost ground on the weakening in the US Dollar (USD) and escalating geopolitical tensions in the Middle East.
A decline in the Greenback lifts the USD-denominated commodity price as it makes oil less expensive for overseas buyers. The US Dollar Index (DXY), a measure of the USD's value relative to its most significant trading partners' currencies, declines to new multi-month lows near 103.20.
A Houthi spokesman said late Tuesday that they will attack any Israeli ship that violates the group's ban on Israeli ships passing through the Red and Arabian Seas, the Bab al-Mandab Strait, and the Gulf of Aden, effective immediately.
Meanwhile, Trump is trying to choke off Iranian oil exports as part of his attempts to push Tehran to curtail its nuclear program. Iran's Supreme Leader, Ayatollah Ali Khamenei, said on Saturday that his country will not be bullied into negotiations. The rising geopolitical tensions in the Middle East could provide some support to the WTI price in the near term.
Crude Oil inventories climbed last week. The American Petroleum Institute (API) weekly report showed crude oil stockpiles in the United States for the week ending February 28 rose by 4.247 million barrels, compared to a fall of 1.455 million barrels in the previous week. The market consensus estimated that stocks would increase by 2.1 million barrels.
US President Donald Trump’s tariff policy uncertainty and the concern over the impact of tariffs on global economic growth might undermine the WTI price. Trump reversed his decision to double tariffs on Canadian steel and aluminum to 50%, which he announced late Tuesday. The White House confirmed that fresh 25% tariffs on all imported steel and aluminum will still go into effect on Wednesday, including against allies and major US suppliers Canada and Mexico.
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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