- WTI price shoots up near $70.65 in the Asian session on Wednesday.
- Geopolitical risks in the Middle East underpin WTI.
- Crude oil inventories fell, falling short of expectations.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $70.65 on Wednesday. The price of WTI rises after Iran launched missiles at Israel in a direct attack, raising fears of supply disruptions in the region.
Iran launched more than 200 ballistic missiles at Israel, and Prime Minister Benjamin Netanyahu vows to retaliate against Iran for a missile attack on Tuesday, but Tehran warned that any response would result in “massive destruction,” fueling fears of yet another war. wide. Additionally, Israel warned that it could attack Iranian oil facilities, which could lead to a regional war with Iran, increasing the risk of disruptions to crude oil supplies.
US crude oil inventories fell less than expected last week. According to the American Petroleum Institute (API), crude oil stockpiles in the United States for the week ending September 27 decreased by 1.5 million barrels, compared to a drop of 4.339 million barrels in the week former. The market consensus estimated that reserves would decrease by 2.1 million barrels.
On the other hand, less dovish comments from Federal Reserve (Fed) Chair Jerome Powell, who rejected calls for another big rate cut in November, could weigh on the WTI price.
Fed Chair Jerome Powell stated that further rate cuts are likely as the economy remains on solid ground, but warned against rapid changes.
Traders will be watching speeches by Thomas Barkin, Raphael Bostic, Beth Hammack, Alberto Musalem and Michelle Bowman of the US Federal Reserve (Fed) for fresh impetus. Any hawkish comments from Fed officials could drag the WTI price lower. It should be noted that lower interest rates will reduce the cost of borrowing, which generally increases demand for oil.
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.
