- WTI price extends its rise near $76.85 in the early Asian session on Tuesday.
- Fears of broader conflict in the Middle East boost WTI price.
- Investors expect additional stimulus measures from Chinese officials.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $76.85 on Thursday. WTI price extends rally as rising geopolitical tensions in the Middle East fuel speculation that Israel could attack Iran’s oil infrastructure.
Oil prices soared on fears that Israel may be targeting Iran’s oil industry in retaliation for Tehran’s ballistic missile attack. Iran-backed Hezbollah launched rockets toward Israel’s third-largest city, Haifa, early Monday. On the first anniversary of the Gaza war, Israel planned to step up ground incursions into southern Lebanon, causing fears of a broader war in the region, according to Reuters.
“There is growing concern that the conflict could continue to escalate, not only putting Iran’s 3.4 mmbopd (million barrels of oil per day) of production at risk, but creating further disruptions to regional supply,” the analysts noted. by Tudor, Pickering, Holt & Co.
Weak Chinese demand and disappointing global economic data have clouded the outlook for oil markets this year. However, investors will closely watch further policy measures from China’s top economic planning body on Tuesday, after mainland Chinese markets return from a week-long holiday. The lack of new measures or a smaller-than-expected package could also disappoint the market and weigh on the WTI price.
WTI Oil FAQs
WTI oil is a type of crude oil that is sold in international markets. WTI stands for West Texas Intermediate, one of the three main types that include Brent and Dubai crude. WTI is also known as “light” and “sweet” for 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 through the Cushing facility, considered “the pipeline junction of the world.” It is a benchmark for the oil market and the price of WTI is frequently quoted 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 increased demand and vice versa in the case of weak global growth. Political instability, wars and sanctions can alter supply and impact prices. The decisions of OPEC, 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, as oil is primarily traded in US dollars, so a weaker Dollar can make oil more affordable and vice versa.
Weekly oil inventory reports 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 shows a decline in inventories, it may indicate an increase in demand, which would drive up the price of oil. An increase in inventories can reflect an increase in supply, which drives down prices. The API report is published every Tuesday and the EIA report the next day. Their results are usually similar, with a difference of 1% between them 75% of the time. EIA data is considered more reliable since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 13 oil-producing nations that collectively decide member countries’ production quotas at biannual meetings. Their decisions often influence WTI oil prices. When OPEC decides to reduce quotas, it can restrict supply and drive up oil prices. When OPEC increases production, the opposite effect occurs. OPEC+ is an expanded group that includes ten other non-OPEC member countries, including Russia.
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.
