WTI rises to near $62.50 on US Oil stock drop, Ukraine-Russia talks in focus
- WTI price climbed as last week’s US Oil inventory drop signaled stronger demand ahead.
- Oil prices could face pressure from increased supply if Ukraine and Russia reach a peace agreement.
- The dovish Fed tone continues to provide support for crude Oil prices.
West Texas Intermediate (WTI) Oil price recovers its recent losses from the previous session, trading around $62.30 per barrel during the early European hours on Wednesday. Crude Oil prices appreciate due to the decline in the United States (US) Oil stock for the week ending August 15, pointing to stronger demand ahead.
US American Petroleum Institute (API) Weekly Crude Oil Stock showed a 2.4 million-barrel inventory decline, exceeding expectations for a 1.2 million-barrel drop, reported by API’s Weekly Statistical Bulletin (WSB).
However, the upside of the Crude Oil prices could be restrained due to Ukraine-Russia peace hopes. Any positive development toward a possible resolution of the Ukraine-Russia war could lead to an end to sanctions on Russian energy exports and boost Oil supply.
White House press secretary Karoline Leavitt stated on Tuesday that plans for a bilateral meeting between Russian President Vladimir Putin and Ukrainian President Volodymyr Zelenskyy are now underway, according to CNN. However, Russia has not confirmed it will take part in talks with Zelenskyy.
Furthermore, US President Donald Trump announced that the US would not place American troops on the ground to help enforce a potential peace deal in Ukraine. The terms of security guarantees are still being negotiated between the US, European partners, and Ukraine.
The prices of black gold also receive support from the dovish sentiment surrounding the Federal Reserve’s (Fed) policy decision for the September meeting. It is worth noting that lower borrowing costs could stimulate economic activity in the United States, the world’s largest Oil consumer, which in turn may lend support to crude prices.
Traders await the US Federal Reserve’s Minutes for the July meeting due later in the North American session. Market attention would shift toward the Jackson Hole Economic Policy Symposium due on Thursday, with Fed Chair Jerome Powell’s speech for guidance on a September policy decision.
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.