WTI falls below $72.50 following a sharp rise in US crude inventories
- WTI price depreciated after the API’s report showed a sharp increase in US crude inventories.
- Weekly Crude Oil Stock rose to 9.04 million barrels in the previous week—the largest increase in a year.
- Crude Oil prices may find support as supply concerns intensify due to escalating geopolitical tensions in the Middle East.
West Texas Intermediate (WTI) Oil price snaps a three-day winning streak, trading around $72.40 per barrel during European hours on Wednesday. The decline follows the American Petroleum Institute’s (API) report revealing a sharp increase in US crude inventories.
The API reported a surge of 9.04 million barrels in Weekly Crude Oil Stock for the week ending February 7, significantly exceeding the expected 2.8 million barrel build—the largest increase in a year.
Market sentiment remains cautious due to escalating trade tensions and broader economic uncertainty. Concerns have grown over the impact of US President Donald Trump’s steel and aluminum tariffs, which could disrupt Oil drilling operations that rely on specialty steel not produced domestically.
However, crude Oil prices may find support amid growing supply concerns driven by geopolitical tensions in the Middle East. On Tuesday, Israeli Prime Minister Benjamin Netanyahu warned that the ceasefire would end, and Israel would resume "intense fighting" in Gaza if Hamas fails to release hostages by Saturday noon, as reported by the BBC. Meanwhile, US President Trump urged Israel to break the ceasefire if hostages were not returned by the weekend.
Further limiting losses, concerns over Russian and Iranian Oil supplies persist due to ongoing sanctions. US measures imposed last month on tankers, producers, and insurers have disrupted Russian Oil shipments to China and India. Additionally, new sanctions target networks facilitating Iranian Oil exports to China as part of Trump’s renewed “maximum pressure” campaign.
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.
Author
Akhtar Faruqui
FXStreet
Akhtar Faruqui is a Forex Analyst based in New Delhi, India. With a keen eye for market trends and a passion for dissecting complex financial dynamics, he is dedicated to delivering accurate and insightful Forex news and analysis.
