- WTI price spikes to near $70.65 in Wednesday’s Asian session.
- Middle East geopolitical risks underpin the WTI.
- Crude Oil Inventory dropped, falling short of expectations.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $70.65 on Wednesday. WTI price edges higher after Iran launched missiles at Israel in a direct attack, raising fear of supply disruptions in a region.
Iran launched over 200 ballistic missiles at Israel, and Prime Minister Benjamin Netanyahu vows to retaliate against Iran for a missile attack on Tuesday, but Tehran warned that any response would result in "vast destruction, fuelling fears of a wider war. Additionally, Israel warned it could attack Iranian oil facilities, which could lead to a regional war with Iran, increasing the risk of crude supply disruptions.
US crude oil inventories dropped less than expected last week. According to the American Petroleum Institute (API), crude oil stockpiles in the United States for the week ending September 27 declined by 1.5 million barrels, compared to a fall of 4.339 million barrels in the previous week. The market consensus estimated that stocks would decline by 2.1 million barrels.
On the other hand, less dovish remarks from the Federal Reserve (Fed) Chair Jerome Powell that pushed back against calls for another big rate cut in November could weigh on the WTI price.
Fed Chair Jerome Powell stated that more rate cuts are likely as the economy remains on solid ground, yet he cautioned against rapid changes.
Traders will monitor the US Federal Reserve (Fed) Thomas Barkin, Raphael Bostic, Beth Hammack, Alberto Musalem, and Michelle Bowman's speeches for fresh impetus. Any hawkish comments from Fed officials could drag the WTI price lower. It’s worth noting that lower interest rates will reduce the cost of borrowing, which generally lifts the oil 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.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD eases to 1.1050 amid cautious markets
EUR/USD turns south toward 1.1050 on Wednesday's European morning. The pair remains undermined by sustained US Dollar strength, in the face of the Middle East conflict and pre-ADP data nervousness. Speeches from ECB and Fed policymakers will be also eyed.
GBP/USD stays pressured toward 1.3250 on tepid risk sentiment
GBP/USD remains pressured toward 1.3250 early Wednesday, following the previous decline. This downside could be attributed to risk aversion due to the rising geopolitical tensions in the Middle East, which underpins the safe-haven US Dollar at the expense of the risk-sensitive Pound Sterling.
Gold price edges lower on firmer US Dollar, geopolitical risks might cap its downside
Gold price ticks lower during the early European session on Wednesday and erodes a part of the previous day's strong gains of over 1%, triggered by a further escalation of geopolitical tensions in the Middle East.
Are we in for a Bitcoin and crypto market Uptober? Let's observe the key factors
Bitcoin and the crypto market may rally in the coming days as “Uptober” is trending across several crypto community platforms on Tuesday. However, a few key market factors could alter or strengthen the bullish bias among investors.
RBA widely expected to keep key interest rate unchanged amid persisting price pressures
The Reserve Bank of Australia is likely to continue bucking the trend adopted by major central banks of the dovish policy pivot, opting to maintain the policy for the seventh consecutive meeting on Tuesday.
Five best Forex brokers in 2024
VERIFIED Choosing the best Forex broker in 2024 requires careful consideration of certain essential factors. With the wide array of options available, it is crucial to find a broker that aligns with your trading style, experience level, and financial goals.