WTI drifts higher above $73.00 on Middle East conflicts and hurricane risks
|- WTI price climbs to near $73.20 in Thursday’s early European session.
- The escalating Middle East geopolitical tensions and Hurricane Milton risks underpin the WTI price.
- The worry about Chinese sluggish demand might cap the upside for oil prices.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $73.20 on Thursday. The WTI price edges higher on the fears of oil supply disruptions in the Middle East amid the ongoing tensions and Hurricane Milton in the United States.
A potential Israeli attack on Iranian oil infrastructure could boost the WTI price in the near term. Israeli Defence Minister Yoav Gallant said Israel’s retaliation to Iran’s missile attack would be “powerful, precise, and above all – surprising.”
A severe hurricane that hit Florida has already increased demand for gasoline, with almost a quarter of fuel stations running out of supplies. This, in turn, helps to lift the black gold prices.
US crude oil inventories rose more than expected last week. According to the Energy Information Administration (EIA), crude oil stockpiles in the United States for the week ending October 4 jumped by 5.81 million barrels, compared to a rise of 3.889 million barrels in the previous week. The market consensus estimated that stocks would increase by only 2 million barrels.
The World Bank projected China’s growth rate would drop to 4.3% next year, down from a forecast of 4.8% in 2024, citing concerns about weak Chinese consumer spending. Meanwhile, the US EIA on Tuesday downgraded its demand forecast for 2025 on weakening economic activity in China and North America. Investors have worried about slow growth dampening fuel demand in China, and this might cap the upside for the WTI for the time being as China is the world's largest crude importer.
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.
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