- WTI attracts some sellers near $73.35 in the early Asian session on Wednesday.
- The possible ceasefire between Hezbollah and Israel, and continued concerns about demand from China could undermine the price of WTI.
- Increasing geopolitical risks in the Middle East could limit the rise of WTI.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $73.35 on Wednesday. The price of WTI falls due to the report of a possible ceasefire between Hezbollah and Israel. However, fears of a possible attack on Iran’s oil infrastructure could limit its decline.
Investors have reduced their war risk bets as the lack of further escalation eased fears of oil supply disruption in the Middle East. This, in turn, weighs on the price of WTI on the day. Israeli Defense Minister Yoav Gallant will meet with US Defense Secretary Lloyd Austin at the Pentagon on Wednesday to discuss security developments in the Middle East.
Meanwhile, the development of geopolitical tension in the region will be closely watched. Fears that Israel may be targeting Iran’s oil industry in retaliation for Tehran’s ballistic missile attack could drive up the price of black gold.
US crude oil inventories rose more than expected last week. According to the American Petroleum Institute (API), crude oil stockpiles in the United States for the week ending October 4 increased by 10.9 million barrels, compared with a drop of 1.5 million barrels in the previous week. The market consensus estimated that reserves would increase by only 1.95 million barrels.
Disappointment that Chinese officials did not announce new stimulus measures at a press conference on Tuesday is contributing to the decline in WTI, as China is the world’s largest crude oil importer. “Ongoing concerns about demand from China persist due to a lack of stimulus, while the conflict in the Middle East has not led to any supply disruptions,” said Svetlana Tretyakova, senior oil market analyst at Rystad Energy.
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.
