WTI US Oil steadies as geopolitical moves counter bearish inventory data
- WTI US Oil stabilizes near $58.30, recovering from a five-month low despite bearish US inventory data.
- The American Petroleum Institute reports a large 7.36M barrel build in Crude Oil stocks, offset by a drop in distillates.
- Market sentiment improves slightly after Washington’s pressure on India to halt Russian Oil imports.
West Texas Intermediate (WTI) US Oil trades around $58.30 on Thursday, flat for the day at the time of writing, as it holds its rebound from a five-month low marked on Tuesday at $57.33.
The market digests mixed signals after the American Petroleum Institute (API) confirmed on Wednesday a larger-than-expected build of 7.36 million barrels in US Crude Oil inventories last week.
According to the API report, gasoline stocks increased by 3 million barrels, while distillate inventories declined by 4.8 million, offering contrasting signs about domestic energy demand. Analysts at ING, Ewa Manthey and Warren Patterson, said that the fall in distillates “provides mixed signals on consumption, but the crude build is clearly bearish for Oil in the near term.”
Despite the bearish data, WTI remains resilient as investors focus on geopolitical developments. US President Donald Trump said on Thursday that Indian Prime Minister Narendra Modi had pledged to stop buying Russian Oil, according to the BBC. The announcement, together with comments from US Treasury Secretary Scott Bessent that Japan is also expected to halt Russian energy imports, raises expectations of tighter global supply.
Tony Sycamore, market analyst at IG, noted that India’s move “is a marginally positive development for crude prices, as it removes a key buyer from Russia’s export market.”
Meanwhile, the United Kingdom (UK) imposed new sanctions on Lukoil and Rosneft, Russia’s two largest Oil companies, and restricted dozens of shadow fleet tankers, further tightening the energy sanctions regime against Moscow.
On the macroeconomic data front, the US government shutdown, now in its third week, continues to weigh on sentiment and on the US Dollar (USD). A Treasury official estimated the closure is costing around $15 billion per week to the US economy, limiting demand expectations.
The market will closely watch the Energy Information Administration (EIA) Crude Oil Stocks Change data due later in the day, which is expected to show a modest 0.12M barrel increase after the 3.715M build recorded previously, for further clues on short-term supply dynamics.
Overall, the combination of geopolitical risk and supply uncertainty offsets part of the pressure from the bearish API data, keeping WTI stable near $58.30 for the day.
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.