WTI drifts lower to near $72.50 as US stockpile rises
- WTI price tumbles to around $72.60 in Wednesday’s late American session.
- US Crude oil stockpiles rose by 3.463 million barrels last week, according to the EIA.
- The firmer USD weighs on the commodity price.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $72.60 during the late American session on Wednesday. The WTI price edges lower after US crude stockpiles rose more than expected last week.
US crude inventories rose last week. The US Energy Information Administration (EIA) weekly report showed crude oil stockpiles in the United States for the week ending January 24 increased by 3.463 million barrels, compared to a decline of 1.017 million barrels in the previous week. The market consensus estimated that stocks would rise by 3.7 million barrels.
The White House said later Tuesday that US President Donald Trump’s plan to impose 25% tariffs on imports from Canada and Mexico from February 1. The Trump tariff threats may disrupt the flow of crude supplies, which weigh on the black gold in the near term. “While we expect prices to stay supported at current levels, news flow related to Trump is likely to drive volatility in the near term,” said UBS analyst Giovanni Staunovo.
The US Federal Reserve left its benchmark rate unchanged at its January meeting on Wednesday and gave little insight on when it plans to lower borrowing costs. This, in turn, boosts the US Dollar (USD) broadly and might exert some selling pressure on the USD-denominated commodity price. Oil traders will keep an eye on the advanced US Gross Domestic Product (GDP) for the fourth quarter (Q4), followed by the weekly Initial Jobless Claims, and Pending Home Sales.
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.