WTI Oil steadies above $85 as hopes of a Middle East peace agreement start to fade
- WTI Oil appreciates beyond $2 from Tuesday's lows and consolidates around $85.50.
- Growing scepticism about the fate of the peace negotiations in the Middle East has provided mild support to Crude prices.
- US API Oil stocks increased against expectations in the first week of November, keeping Oil recovery limited.
Oil prices have picked up from two-month lows on Wednesday, as investors start to worry about the lack of progress on the negotiations to reach a peace deal in the Middle East. The US benchmark West Texas Intermediate (WTI) Oil has appreciated more than $2 from Tuesday’s lows and consolidates around $85.50 during the European session.
Investors' optimism about a peace agreement between Washington and Tehran is starting to deteriorate as the days go by without any relevant advance in the talks, while attacks on vessels attempting to cross the Strait of Hormuz continue.
US officials maintain their optimistic view, pushing back the possibility of new attacks on Iran. Secretary of State Marco Rubio affirmed in a G7 meeting in Paris on Tuesday that ”there is no need for major combat operations” and President Donald Trump affirmed that he is keeping the war at “status quo”, although he warned that the US military is “locked and loaded”.
Attacks in the Strait of Hormuz continue
Meanwhile, the UK Maritime Trade Operations (UKMTO), an organisation surveying global sea trade, reported a new attack on an Oil tanker northeast of the coast of Oman on Tuesday, shortly after the US Defence Secretary, Pete Hegseth, affirmed that the US controls the Strait of Hormuz. Incidents of this sort have reduced Oil traffic to a trickle in a corridor that transported about 20% of global Oil supply before the war, boosting market fears of supply disruptions and keeping prices between 20% and 60% above pre-war levels for most of the last eight months.
Also on Tuesday, data from the American Petroleum Institute (API) revealed that Crude Oil stocks increased by 9 million barrels in the week ending November 6, against market expectations of a 1 million barrel drawdown and following a 5.2 million barrel decline in the previous week. These figures have contributed to limiting WTI Oil’s recovery.
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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