- The price of WTI loses land about $ 64.25 in the first bars of the Asian session on Tuesday, with a 0.20% drop in the day.
- The high fire between Israel and Iran reduces geopolitical risks in the Middle East, wearing the price of WTI.
- The production of crude oil in the US reached a record in April, according to EIA.
The West Texas Intermediate (WTI), the referent of crude oil in the US, is quoted around $ 64.25 during the Asian negotiation hours on Tuesday. The WTI price moves down in the middle of the reduction of geopolitical risks in the Middle East and a possible increase in OPEC+ production in August.
The fears that tensions in the Middle East interrupt the global oil supply decrease after the high fire between Israel and Iran. This could undermine black gold in the short term. The market has eliminated most of the geopolitical risk premium incorporated into the price after the high fire between Iran and Israel, said Ig Markets analyst Tony Sycamore.
The organization of oil exporting countries and its allies (OPEP+) are ready to consider an increase of 411,000 barrels per day (BPD) for August when they meet on Sunday, after increases in similar size production for May, June and July. This would be the fourth monthly increase since the group began to undo the production cuts in April.
Meanwhile, the production of crude oil in the US reached a record of 13.47 million BPD in April, compared to 13.45 million BPD in the previous reading, according to data published by the Energy Information Administration (EIA). This reading contributes to the decline of the WTI.
Investors will closely follow trade negotiations, with only 10 days until the tariffs of US President Donald Trump resume. Any positive development around commercial conversations could provide some support to oil demand, promoting the price of WTI.
WTI FAQS oil
WTI oil is a type of crude oil that is sold in international markets. WTI are the acronym of West Texas Intermediate, one of the three main types that include the Brent and Dubai’s crude. The WTI is also known as “light” and “sweet” by its relatively low gravity and sulfur content, respectively. It is considered high quality oil that is easily refined. It is obtained in the United States and is distributed through the Cushing Center, considered “the crossing of the world.” It is a reference for the oil market and the price of WTI is frequently traded in the media.
Like all assets, supply and demand are the main factors that determine the price of WTI oil. As such, global growth can be a driver of the increase in demand and vice versa in the case of weak global growth. Political instability, wars and sanctions can alter the offer and have an impact on prices. OPEC decisions, a group of large oil -producing countries, is another key price factor. The value of the US dollar influences the price of WTI crude oil, since oil is mainly traded in US dollars, so a weaker dollar can make oil more affordable and vice versa.
Weekly reports on oil inventories published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) influence the price of WTI oil. Changes in inventories reflect the fluctuation of supply and demand. If the data show a decrease in inventories, it can indicate an increase in demand, which would raise the price of oil. An increase in inventories may reflect an increase in supply, which makes prices lower. The API report is published every Tuesday and that of the EIA the next day. Their results are usually similar, with a 1% difference between them 75% of the time. EIA data is considered more reliable, since it is a government agency.
The OPEC (Organization of Petroleum Exporting Countries) is a group of 13 nations oil producing that collectively decide the production quotas of member countries in biannual meetings. Their decisions usually influence WTI oil prices. When OPEC decides to reduce fees, it can restrict the supply and raise oil prices. When OPEC increases production, the opposite effect occurs. The OPEC+ is an expanded group that includes another ten non -members of the OPEC, among which Russia stands out.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
