WTI rises on Middle East tensions and softer US Dollar
- WTI crude extends gains for the second straight day, with spot price hovering below $67.00.
- WTI advances amid flaring Middle East tensions and a softer US Dollar.
- Geopolitical risks rise amid US tariff threats and potential Russia sanctions.
West Texas Intermediate (WTI), the US Crude Oil benchmark, extends gains for the second straight day on Friday, with spot prices hovering around $66.90 during the American trading hours, up nearly 1% on the day.
The upside emerges amid renewed supply-side jitters and a softer US Dollar, which makes dollar-denominated commodities more attractive to foreign buyers. Still, price action remains confined within a narrow $65.00-$68.00 range, highlighting the ongoing tug-of-war between supply fears and tepid demand.
The latest uptick in Oil prices follows ongoing supply disruptions in Iraq’s Kurdistan region, where a fourth consecutive day of drone strikes has cut production nearly in half, from around 280,000 barrels per day to just 150,000. The supply shock coincides with a sharper-than-expected decline in US crude inventories. Data from the Energy Information Administration (EIA) showed stockpiles declined by 3.8 million barrels in the week ending July 11, reversing a prior 7.07 million-barrel build. US inventories are now nearly 8% below their five-year seasonal average, underscoring robust domestic consumption and limited spare capacity.
Adding to the bullish backdrop, markets are also reacting to concerns over potential United States (US) tariffs and sanctions on Russia, which could further disrupt global flows. Seasonal factors are amplifying the pressure, with peak summer travel in the US lifting demand for gasoline. Meanwhile, the International Energy Agency (IEA) recently warned that the oil market may be tighter than previously anticipated, citing resilient summer demand.
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.