WTI slides toward $63.00 as US refiners struggle to absorb Venezuelan crude
- WTI falls as US Gulf Coast refiners absorb a surge in Venezuelan crude after last month’s $2 billion supply deal.
- Crude Oil prices may extend gains as tensions rise after a US–Iran drone incident and Strait of Hormuz confrontation.
- API data shows US crude inventories fell 11.1 million barrels last week, the biggest draw since June.
West Texas Intermediate (WTI) Oil price declines after registering nearly 3% gains in the previous session, trading around $63.50 per barrel during the early European hours on Wednesday. Crude Oil prices struggle as United States (US) Gulf Coast refiners grapple with a sharp rise in Venezuelan crude shipments following last month’s flagship $2 billion supply agreement between Caracas and Washington.
However, crude prices may extend gains from the previous session as geopolitical tensions resurface. The US reportedly downed an Iranian drone near the Abraham Lincoln aircraft carrier in the Arabian Sea, while armed boats approached a US-flagged vessel in the Strait of Hormuz, reviving supply-risk concerns.
However, US President Donald Trump emphasized that diplomatic channels remain open, with the White House confirming that US–Iran talks are still scheduled for Friday. Meanwhile, regional power the United Arab Emirates (UAE) urged Iran and the US on Tuesday to use the resumption of nuclear talks this week to defuse the standoff, which has been marked by mutual threats of air strikes. Several OPEC members, including Saudi Arabia, Iran, the United Arab Emirates, Kuwait, and Iraq, export most of their crude through the Strait of Hormuz, primarily to Asian markets.
Oil prices also gained support from American Petroleum Institute (API) data, which showed US crude inventories fell by 11.1 million barrels last week, the largest draw since June. Meanwhile, OPEC+ expects oil demand to gradually recover from March or April and will decide on March 1 whether to resume monthly output increases following a first-quarter pause.
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.
Nothing in this material constitutes investment advice, personal recommendation, investment research, an offer, or a solicitation to buy or sell any financial instrument. The content has been prepared without consideration of your individual investment objectives, financial situation, or needs, and should not be treated as such.
Past performance is not a reliable indicator of future performance and/or results. Forward-looking scenarios or forecasts are not a guarantee of future performance. Actual results may differ materially from those anticipated.
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