WTI edges higher to near $67.50 on tighter US supplies
- WTI price drifts higher to $67.40 in Thursday’s early Asian session.
- Crude oil stockpiles in the US rose by 1.448 million barrels last week, according to the EIA.
- Concerns over the US economic slowdown and Trump's aggressive tariffs on imports might weigh on the WTI.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $67.40 during the early Asian session on Thursday. The WTI price extends the rally amid tighter-than-expected oil inventories. However, the upside for the WTI price might be limited due to mounting fears of a US economic slowdown and the impact of tariffs on global economic growth.
Crude Oil inventories climbed last week. The US Energy Information Administration (EIA) weekly report showed crude oil stockpiles in the United States for the week ending March 7 increased by 1.448 million barrels, compared to a rise of 3.614 million barrels in the previous week. The market consensus estimated that stocks would increase by 2.1 million barrels.
"This week, the oil build was smaller than expected and gasoline and diesel draws were larger than expected," noted Josh Young, Chief Investment Officer, Bison Interests. "This evidences stronger demand and could see oil prices rise as a result.”
Nonetheless, US President Donald Trump's aggressive tariffs on imports are expected to raise prices for businesses, boost inflation and undermine consumer confidence in a blow to economic growth. This, in turn, might drag the WTI price lower. The White House confirmed on Tuesday 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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