- The WTI price rises to around $ 62.80 in the first Asian session on Wednesday.
- The increase in geopolitical risks and supply fears support the price of WTI.
- OPEC+ decided to increase production by 411,000 BPD in July.
The West Texas Intermediate (WTI), the referent of the US crude oil, is negotiated around $ 62.80 during the Asian negotiation hours on Tuesday. The WTI price extends the rally at two -week maximums in the midst of persistent geopolitical tensions and a weaker US dollar (USD). The operators will take more signs of the EIA crude oil inventory report, which will be published later on Wednesday.
A Russian official said on Tuesday that the work to achieve an agreement to end the war in Ukraine was complicated and that it would be wrong to expect imminent decisions, but that he was waiting for Ukraine’s reaction to his proposals. Meanwhile, Iran is prepared to reject an US proposal to end a nuclear dispute of decades after the US draft insisted that Tehran would have to suspend the enrichment of uranium within Iran.
“The risk premium has increased this week, since the perspective of a high fire between Russia and Ukraine, as well as an Iranian nuclear agreement, now seem to have been postponed for weeks, if not months,” analysts of the energy advisory firm Ritterbusch and Associates said.
The organization of oil exporting countries and its allies (OPEP+) decided to increase their production again on Saturday. OPEC+ planned to increase production at a constant pace of 411,000 barrels per day (BPD) in July, after an increase in May and June. The group indicated in a statement that a “stable global economic perspective and the current foundations of the healthy market, as reflected in the low oil inventories” were their reasoning for the increase in July.
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.
Petroleum operators await the very anticipated report of non -agricultural payroll (NFP) of the US for May, which will be published later on Friday. The NFP is expected to show an employment growth of 130,000 in May, while it is projected that the unemployment rate will remain stable in 4.2% in the same period of the report. In case of a stronger result than expected, this could raise to the dollar and limit the upward potential for the WTI, since it would make oil more expensive for the holders of other currencies.
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.
