WTI drifts higher above $69.00 on Venezuela supply worries
- WTI price edges higher to $69.15 in Wednesday’s early Asian session.
- Crude oil stockpiles in the US fell by 4.6 million barrels last week, according to the API.
- Trump said he will impose tariffs on countries that buy oil and gas from Venezuela.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $69.15 during the early Asian session on Wednesday. The WTI price extends its upside on a larger-than-expected crude draw and concerns about tighter global supply due to threatened US tariffs on countries buying Venezuelan production.
Crude Oil inventories declined larger than expected last week. The American Petroleum Institute (API) weekly report showed crude oil stockpiles in the United States for the week ending March 14 fell by 4.6 million barrels, compared to an increase of 4.593 million barrels in the previous week. The market consensus estimated that stocks would decrease by 2.5 million barrels.
US President Donald Trump said late Monday that he would be placing a 25% tariff on all imports from any country that buys oil or gas from Venezuela, effective April 2, as well as imposing new tariffs on the South American country itself. The fears of tighter global supply lift the WTI price to a three-week high.
On the other hand, the United States reached deals with Ukraine and Russia to pause attacks at sea and against energy targets, with Washington also attempting to ease certain sanctions against Moscow. A maritime and energy ceasefire between Russia and Ukraine offset concerns about tighter global supply, which might drag the WTI price lower.
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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