West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $86.85 during the Asian trading hours on Wednesday. The WTI price falls as the US-Iran talks signal hope for Middle East peace. Traders brace for the release of the US Energy Information Administration (EIA) report, which will be published later on Wednesday.
Reuters reported on Tuesday that US President Donald Trump appears to be determined to reach a deal with Iran aimed at ending hostilities in the Middle East. This action came a day after Trump ordered a five-day delay of attacks on Iran’s power plants, saying the US had talks with unnamed Iranian officials that produced “major points of agreement.”
Iran indicated that it prefers to negotiate with Vice President JD Vance rather than other US envoys, highlighting trust issues and adding uncertainty to already fragile ceasefire talks.
A rise in US crude oil inventories might contribute to the WTI’s downside. According to the American Petroleum Institute (API) report, crude oil stockpiles in the US for the week ending March 20 climbed by 2.3 million barrels, compared to a rise of 6.6 million barrels in the previous week. The market consensus was for a decline of 1.3 million barrels.
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of 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 via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
