- The price of WTI rose due to the growing concerns for the offer after the news that Israel plans to attack nuclear facilities in Iran.
- Iran could block the river routes through the Ormuz Strait, which generates concerns about the oil flow of the main Gulf countries.
- The weekly inventories of crude oil of the API increased by 2.49 million barrels last week, challenging the expectations of a decrease of 1.85 million barrels.
The price of oil West Texas Intermediate (WTI) extends its profits per fourth consecutive session, quoting around $ 62.70 per barrel during the first European hours on Wednesday. The prices of crude oil shoot after the news that Israel plans to attack nuclear facilities in Iran, which could destabilize the oil supply of the Middle East region. However, CNN quoted officials saying that it was not clear if Israeli leaders had made a final decision.
An Israeli attack could alter the flows from Iran, the third largest oil producer among the members of the Organization of Petroleum Exporting Countries (OPEC). Petroleum prices go up as concerns in supply increase if Iran can retal and block river paths through the Ormuz Strait, which generates concerns about crude oil exports from the main Gulf countries such as Saudi Arabia, Kuwait, Iraq and the United Arab Emirates.
The increase in oil prices could be restricted due to the improvement of the supply of crude oil in the United States (USA), the world’s largest oil consumer. Weekly inventories of crude oil from the American Petroleum Institute (API) increased by 2.49 million barrels in the previous week, less than the previous increase of 4.28 million barrels the previous week, but against the expected decrease of 1.85 million barrels. Investors are attentive to change in crude oil inventories of Energy Information Administration (EIA) later on Wednesday.
In addition, the production of oil in Kazakhstan has increased by 2% in May, after a 3% decrease in April, although it still exceeds its OPEC+quota. This increase has challenged OPEC+ pressure on the country to reduce its production. The Kazakhstan Ministry of Energy avoided responding to a request for comments on production figures.
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.
