WTI declines to near $63.50 as US-Iran talks ease supply fears
- WTI weakens after Iran confirmed talks with the US in Oman, easing Middle East supply disruption fears.
- Iranian Foreign Minister Araghchi said talks will be held in Oman on Friday, with US officials confirming continued nuclear engagement.
- EIA data showed US crude inventories fell 3.455 million barrels, beating expectations amid winter storm disruptions.
West Texas Intermediate (WTI) Oil price declines after two days of gains, trading around $63.50 per barrel during the Asian hours on Thursday. Crude Oil prices weakened after Tehran confirmed it would hold talks with the United States (US) in Oman on Friday, easing fears that a wider conflict could disrupt Middle East Oil supplies.
However, Oil prices jumped on media reports suggesting the talks might collapse, but officials from both sides later said discussions would proceed as scheduled, even though the agenda remains unsettled.
Iranian Foreign Minister Abbas Araghchi said talks will be held in Oman on Friday, while a White House official confirmed continued engagement on a potential nuclear deal. Uncertainty persists over the scope, with Tehran aiming to limit discussions to its nuclear program and Washington seeking to include missiles, regional militancy, and human rights.
Dollar-denominated Oil prices also face headwinds from a stronger US Dollar (USD), driven by hawkish Federal Reserve signals and expectations of slower rate cuts. Fed Governor Lisa Cook said she would not support further easing without clearer evidence that inflation is cooling, highlighting concerns over stalled disinflation.
Meanwhile, Energy Information Administration (EIA) data showed US crude inventories fell by 3.455 million barrels last week, far exceeding expectations for a 2 million draw, as winter storms disrupted supply.
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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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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