WTI holds above $76.50 on US sanctions on Russian oil exports
- WTI price posts modest gains near $76.75 in Wednesday’s early Asian session.
- US EIA expected oil demand to steady in 2025 and 2026.
- US crude oil inventories dropped by 2.6 million barrels last week, according to the API.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $76.75 on Wednesday. The WTI price edges higher as new US sanctions on Russian oil exports threaten to tighten global supplies. The upside for black gold might be limited after a US government agency forecast steady US oil demand in 2025.
The Biden administration announced new sanctions on Russia's oil sector last week, blacklisting almost 200 vessels from its so-called shadow fleet and targeting the Russian oil producers Gazprom Neft and Surgutneftegas. The mounting concerns over supply disruptions could support the WTI in the near term.
On the other hand, WTI price could face some selling pressure due to global oil production outpacing demand, according to the US Energy Information Administration (EIA) report on Tuesday. The EIA noted that the US's oil demand would remain steady at 20.5 million barrels per day (bpd) in 2025 and 2026, with domestic oil output rising to 13.55 million bpd, an increase from the agency's previous forecast of 13.52 million bpd for this year.
The US crude inventories fell less than expected last week, signalling a weaker demand for WTI price. The API weekly report showed crude oil stockpiles in the United States for the week ending January 10 decreased by 2.6 million barrels, compared to a fall of 4.022 million barrels in the previous week. The market consensus estimated that stocks would decline by 3.5 million barrels.
Later on Wednesday, Oil traders will monitor the US Consumer Price Index (CPI) inflation data for December for fresh impetus. In case of a softer-than-expected outcome, this could drag the Greenback lower and lift the USD-denominated commodity price.
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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